Patriot Coal Corporation (fka PCXCQ)

[frankj]

N.Y. Judge Moves Patriot Coal Bankruptcy Case to St. Louis
BY Dow Jones & Company, Inc.
— 1:42 PM ET 11/27/2012

A bankruptcy judge on Tuesday moved Patriot Coal Corp.'s (PCXCQ) bankruptcy case to St. Louis from New York, saying she couldn't look past the company's creation of New York-based entities just before its July bankruptcy filing.

Judge Shelley C. Chapman of U.S. Bankruptcy Court in Manhattan sided with a mine workers' union that argued Patriot abused bankruptcy "venue" rules by creating those two entities, but disagreed that the case should be moved to West Virginia, where many of those mine workers are employed. The judge said that among other things, West Virginia would be inconvenient for many parties involved in the case. She instead chose St. Louis, where Patriot has its headquarters.

"Transferring these cases to the Eastern District of Missouri will serve the interest of justice and, as among venue choices other than this District, best serve the convenience of the parties," Judge Chapman wrote. The professionals working on the case predominantly reside in the New York area, and Patriot had argued that the costs of moving the case could be burdensome.

The judge's decision seemed more in line with arguments made by a federal bankruptcy watchdog, U.S. trustee Tracy Hope Davis. The trustee had argued that Patriot's creation of two new businesses right before its bankruptcy filing was a clear attempt to circumvent the bankruptcy code, but didn't take a position on where the case should be moved. Judge Chapman did.

"The Debtors created facts in order to satisfy the statute, as opposed to taking advantage of the facts as they existed," Judge Chapman said in her 61- page ruling, issued two and a half months after a three-day hearing on whether the case should be moved. The hearing was simulcast in courthouses in both West Virginia and St. Louis, and was a hot topic of conversation among bankruptcy professionals in New York whether they were involved with the case or not.

A Patriot spokesman had no immediate comment.

The Bankruptcy Code's venue rules allow a company to file in either its primary place of business or where its affiliates file for bankruptcy. The company and its main lenders had all argued that the case should remain in New York, and many observers have called the decision an important one for the future of bankruptcy venue. A majority of large companies file bankruptcy in New York and Delaware.

Patriot and 98 of its affiliates filed for Chapter 11 protection in July, victims of widespread problems in the coal industry.

The company was formed in 2007 from assets split from top U.S. coal-mining company Peabody Energy Corp (BTU). Patriot's mines are concentrated in central Appalachia, a region plagued by high costs after more than a century of mining there depleted much of the easy-to-access coal.

(Dow Jones Daily Bankruptcy Review covers news about distressed companies and those under bankruptcy protection. Go to http://dbr.dowjones.com)

Write to Joseph Checkler at [e-mail]. Follow him on Twitter at @JoeCheckler

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(END) Dow Jones Newswires
11-27-12 1342ET
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