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- Title
Bankruptcy as Bailout: Coal Company Insolvency and the Erosion of Federal Law.
- Authors
Macey, Joshua; Salovaara, Jackson
- Abstract
Almost half of all the coal produced in the United States is mined by companies that have recently gone bankrupt This Article explains how those bankruptcy proceedings have undermined federal environmental and labor laws. In particular, coal companies have used the Bankruptcy Code to evade congressionally imposed liabilities requiring that they pay lifetime health benefits to coal miners and restore land degraded by surface mining. Using financial information reported in filings to the Securities and Exchange Commission and in the companies' reorganization agreements, we show that between 2012 and 2017, four of the largest coal companies in the United States succeeded in shedding almost S5.2 billion of environmental and retiree liabilities. Most of these liabilities were backed by federal mandates. Coal companies disposed of these regulatory obligations by placing them in underfunded subsidiaries that they later spun off. When the underfunded successor companies liquidated, the coal companies managed to get rid of their regulatory obligations without defaulting on the pecuniary debts they owed to their creditors.
- Subjects
UNITED States; COAL industry laws; CORPORATE bankruptcy lawsuits; FEDERAL laws; ENVIRONMENTAL law; EMPLOYER-sponsored health insurance costs; LABOR laws; HEALTH of coal miners; UNITED States. Bankruptcy
- Publication
Stanford Law Review, 2019, Vol 71, Issue 4, p879
- ISSN
0038-9765
- Publication type
Article