Court Grants Band-Aid for Blackjewel
This story has been corrected to indicate the correct amount of new funding.
During an emergency hearing Friday afternoon, U.S. District Judge Frank Volk approved an additional $2.9 million in debtor-in-possession (DIP) funding to allow the beleaguered company operate through Monday, July 22.
The relief loan was only a bridge, Blackjewel attorney Stephen Lerner admitted, allowing the company to dodge Chapter 7 bankruptcy or the liquidation of their assets and abandonment of the mines.
Legal counsel for Riverstone Credit Partners, who agreed to provide the initial $5 million in emergency funding, called it “a bridge to nowhere.”
He also wondered aloud in the hearing if they were simply buying time. This is the most convoluted, difficult circumstances he and his colleagues have ever seen, he noted, and that after studying any number of options, he and his team have failed to find any viable solution.
“We have yet to find a model that justifies anyone putting any money into this case and are concerned that it’s heading toward Chapter 7,” he said.
Since the approval of that initial DIP loan, Blackjewel has already spent roughly $3 million to preserve the value of the company’s assets.
Prior to making his ruling, Volk questioned Lerner regard possible buyers for some or all of Blackjewel’s assets.
Lerner indicated the Powder River Basin mines were clearly the most valuable assets and are likely to be more attractive to potential investors.
He also speculated one solution would be to use the positive cash flow from the western operations to fund Blackjewel through the bankruptcy process.
The next scheduled hearing, barring any subsequent emergency hearings, is set for July 31.