FM Coal, an Alabama-based company that was formerly associated with Eagle Specialty Materials (ESM), has filed Chapter 11 bankruptcy, according to documents filed in the United States Bankruptcy Court for the Northern District of Alabama Southern Division.
FM Coal owner Michael Costello formed ESM last September to operate the Belle Ayr and Eagle Butte mines after the former owner, Blackjewel LLC, filed bankruptcy and mine employees were abruptly locked out July 1 of 2019. ESM is now under separate ownership, and is not mentioned in the bankruptcy filings. The two companies were never legally affiliated, though Costello was previously listed as an owner and officer of ESM, according to the post. The bankruptcy has no direct effect on ESM or on Belle Ayr or Eagle Butte mines.
The company listed an inability to keep up with the financial obligations inherent in properly maintaining the mines and equipment along with substantial debt obligations as reasons for the filing, according to Rob Godby, director for energy economics and public policies center at the University of Wyoming.
“Companies like FM Coal and ESM are privately held,” Godby said. “As such, they’re under no obligation to make public declarations about their financial health in the way a publicly traded company is required to do. Their financial standing is more mysterious.”
FM Coal’s largest unsecured loan was a $3.58 million loan from the Paycheck Protection Program.
Banks are typically more careful about extending credit to privately held mining companies than to publicly traded ones, Godby explained, because less pertinent financial data is available. He stressed, though, that the FM Coal bankruptcy in no way reflects on the financial health of ESM.