In an effort to “set a little of the record straight,” Blackjewel LLC CEO Jeffrey Hoops laid out the course of events for the past eight days in a July 4 letter to the 1,800 employees currently out of work, including the roughly 600 miners from Belle Ayr and Eagle Butte Mines in Campbell County.
Referencing the three-day rollercoaster ride in which workers learned that Blackjewel filed for Chapter 11 Monday morning in the Southern District of West Virginia, followed by Judge Frank W. Volk’s denial of an emergency motion to secure $20 million in post-petition financing, followed by Hoops and his family members stepping down as a condition for being granted a $5 million dollar emergency loan from Riverstone Credit Partners to secure and maintain the shuttered mines. David Beckman, of FTI Consulting. Inc., was appointed as Chief Restructuring Officer and Interim CEO.
During this time, workers missed a paycheck, were laid off abruptly, and currently have no idea about the future status of their jobs, insurance, or their 401Ks and health savings accounts, as they scramble for news amidst rumors that their money is gone.
“No one is hurting more than me,” Hoops wrote in capital letters, citing threats being made against him, his family, and “anyone associated” with him “as a result of the misinformation.”
The threats, in part, are the result of rumors that Hoops has been purposefully withholding money from employee retirement accounts. Several employees told County 17 that the employee contributions from their paychecks for the past several months – one worker claiming eight weeks – have not been showing up in their retirement accounts. Rumors of Hoop’s investing their money in other ventures have been posted by several workers, with court records confirming that more than a $1 million in company contributions have not been made.
In his July 4 letter, Hoops vehemently denied any wrong doing, and instead claimed that Clearwater Investments, which is owned by a Hoop’s Dynasty Trust “with many investments,” had loaned Blackjewel LLC more than $11 million since January of 2019 due to flooding and missed shipments out West.
“There has not been one cent taken out of the mining company,” he wrote in capitals. “The exact opposite. I have loaned more money to try to get this company through these difficult times.”
In a detailed accounting, Hoops broke down events leading up to July 3.
On Monday (June 24), he and Riverstone agreed on a deal for them to loan his company $20 million “on very favorable terms.’” By the following Wednesday, Riverstone had sent him a notice, stating that rather than extending their $28 million loan through next January as previously promised, they instead said it was due now and payable in full by July 17. At this time, they also notified him that the $11 million he had previously loaned Blackjewel was not done properly and that he might personally be liable for owing Riverstone up to $34 million if he continued to loan money to the company.
On Thursday, June 27, Hoops said Riverstone showed up to his office with FTI Consulting out of Denver, which had forced them into declaring bankruptcy, at which point he and his team’s focus immediately turned to figuring out how to save the company. He met with his attorneys who recommended he had no choice but to begin preparing for Chapter 11 bankruptcy.
Friday morning, Hoops wrote, that his concern was covering payroll for the following day while preparing documents to go to court Monday morning after filing the paperwork midnight on Sunday. After initiating electronic deposit for payroll for the western mines, Hoops learned at 4:31 p.m. from Belle Ayr Mine Manager Joff Pilon that funds weren’t hitting employee accounts, at which points Hoops wrote that he immediately got on the phone with United Bank to find out why. After talking to the bank’s vice president, Hoops was told that Riverstone’s attorney had called the bank earlier in the day to say that Hoops had resigned and that the company was filing bankruptcy and that Hoops was going to empty out his accounts and should therefore be shut down. The bank not only shut down Blackjewel’s account, according to Hoops, but also all of his accounts not related to the company.
Working with the bank “non-stop until after midnight,” Hoops said that United Bank agreed to cover these liabilities and wrote more than 700 cashier’s checks to employees in Wyoming that Hoops then flew to Campbell County via his personal jet on Saturday to deliver them in person with a cost of more than $16,000 to himself.
He then worked around the clock until 4:30 a.m., he said, going home only to shower, put on a suit, and return to the office, to make final preparation for court.
On Monday morning, Blackjewel Holdings LLC filed Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the Southern District of West Virginia, including the company’s other holdings Revelation Energy, LLC, Revelation Energy Holdings, LLC, and Revelation Management Corporation, with 30 unsecured claims and just over $37 million dollars owed in unpaid taxes.
Hoops walked into court, he said, expecting that it would all just be a formality to get his loan approved and keep everyone working as business as usual. Just before walking into court, however, he learned that United Bank had blocked access to all of his funds, so once again, he could not fund the loan.
“It was a very short hearing,” Hoops wrote.
Discussions during testimony before the bankruptcy court earlier in the week allege that Hoops had only made his request of the bank on the day before, Sunday, June 30.
He then reached out to board members, who told him that they had no choice but to idle the mines without funds to pay workers until he could free up his funds to keep operations solvent in the interim as he prepared for restructuring and filed new court motions.
By 2 p.m. Tuesday, Hoops said that they had all the necessary documents ready for their 4:30 p.m. court hearing where he testified for more than five hours, pleading with the judge and other entities to give him a $9 million loan to get everyone back to work. This went on till around 3 a.m. EST the following morning when Judge Volk denied the request.
“The circumstances of this rapidly-unfolding case, that is unlike any I have seen, or read about, or taught about, demand a prompt ruling,” Volk said in the hearing. “I’m making that ruling on the evidence presented today.”
This is when the “meltdown started,” Hoops explained to employees.
Riverstone agreed to float a $5 million loan on the stipulation that Hoops and all of his family members resign and have no further involvement with Blackjewel.
“It all made sense now, as I gave them our plans for the second half of the year that showed cash flow improving by $100 million as a result of the improved shipments in the West and operational changes we were making in the East,” he wrote. “By taking the actions they had been taking the prior six days, this effectively made them owners of the company.”
Hoops agreed to the terms, he told employees, as his only goal was to keep people working and the mines operating.
“I accept responsibility for being unable to lead this company through these difficult times and the purpose for me writing this letter and explaining in detail what happened is to ask that you study it, hold me responsible, but leave my family and other business relationships out of this matter,” he concluded, no longer in capital letters. “I know in my heart how hard I fought for each of you and this company and to have people threaten me and say I took money out of this company for other projects hurts more than words can express as it has been just the opposite and that can be confirmed in a hundred different ways.”
An expedited hearing was held in the United States Bankruptcy Court for the Southern District of West Virginia July 4, with a follow-up hearing in court at 10 a.m. this morning, to address claims from Blackjewel employees that their checks are either not being accepted or are being dishonored.
In a Blackjewel employee update posted on Prime Clerk July 5, the management team stated that they are working with local banks to confirm that the checks are valid and should be honored. If employees are still having difficulties getting checks cashed, they are asked to call the company’s restructuring hot-line at (844) 234- 1462, and they will follow up directly with that employee’s bank.
In the update, management also wrote that “we assure you the company is working as quickly as possible to try to obtain the financing necessary to re-open the mines and bring our employees back to work,” and in the meantime, a small crew will be on site to “protect and preserve the operations” as a necessary first step toward securing additional financing.
Talking from a prayer circle Friday morning, where he stood holding his wife’s hand, surrounded by his “brothers and sisters” as local pastors prayed over he and other laid-off Belle Ayr and Eagle Butte miners, Rory Wallett talked measuredly about reading Hoop’s letter and his response.
Many laid-off miners on the Facebook page Wallett and a co-worker started for the group had less than positive things to say about the letter and the manner and timing of its delivery.
One woman wondered about her 401K, accusing Hoops of living high on their money while they sit around trying to find jobs. He (Hoops) belongs in jail, she wrote. Currently, workers have been directed to contact the benefit plans services department in West Virginia with regard to their retirement benefits.
Wallett understands their frustration and hopes that Hoops knows that it’s coming from a place of frustration and anger at the way in which all of this went down. Had the letter come sooner, then many might have been more understanding. As it were, he noted, it is still really fresh and people are understandably angry and worried.
As far as he’s concerned, Wallett agrees with Hoops that it’s wrong for people to threaten either him or his family.
Wallett appreciates that Hoops did reach out in a letter but wondered why it was written in capital letters.
“You know, when people write in all caps, it kinda feels like they’re yelling at you,” he said.
He also questioned some of Hoops’ facts, given that their cashier’s checks were dated for that previous Friday.
But he shook off all of the doubt. As Wallett has conceded from beginning, he’ll let the facts sort themselves out in court, and he’s not giving into the negativity or rumors. Instead, he’s confident that the city, state, and federal government will get to the bottom of it, and if Hoops has done anything wrong, he’ll be punished by the courts – and a higher power.
“Personally, I don’t have any negative feelings for him one way or the other,” Wallett said, noting that he hopes Hoops reads this article and knows that there are people out here in Campbell County who aren’t harboring any negative feelings for him. He hopes Hoops reaches out to him because he’d gladly welcome it. Since acquiring the mine from Contura in 2017, Hoops has made several trips out to Gillette to meet with workers face-to-face, and Wallett had always found him to be a straight shooter.
“The negative is done,” Wallett said with a shrug, looking around the crowded parking lot outside Braccetto’s Salon downtown where Regan Pickrel from Gillette Foursquare Church and other local pastors came to pray with them that morning and encourage them to have hope and trust in God’s plan. “Let’s focus on the positive.”
And there’s a lot, he said. Things like the enormous outpouring of support from the community, city, county, state legislature, Governor Gordon, and all the hundreds of people and local businesses and organizations that have opened up both their wallets and hearts to help them all out.
Coming from generations of miners on one side of his family, Wallett also comes from a long line of preachers, and now these two worlds squarely meet as he prays with his “family” and looks to the light.