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NEWS

January 5, 2018
Restructuring of Peabody Energy Corporation and its Affiliates Selected as Restructuring Deal of the Year (over US$10B) by The M&A Advisor

 

The Restructuring of Peabody Energy Corporation and its affiliated debtors was selected as winner of the Restructuring Deal of the Year Award (over US$10B). The award will be presented at The M&A Advisor’s 12th Annual Turnaround Awards Gala, to be held on March 21, 2018 in Palm Beach, Florida.

Curtis served as conflicts counsel to the Official Committee of Unsecured Creditors of Peabody  in connection with the Chapter 11 cases of Peabody, captioned as In re Peabody Energy Corporation, et al. (Case No. 16-42529), in the U.S. Bankruptcy Court for the Eastern District of Missouri. Morrison & Foerster LLP served as lead counsel to the Committee.

Peabody, which was represented by Jones Day LLP, filed for protection under Chapter 11 of the U.S. Bankruptcy Code on April 13, 2016. At the time of filing, Peabody was the largest private-sector coal company in the world, owning and operating mining production locations in the U.S. and Australia that served customers in 25 countries across six different continents. Additionally, at the time of filing, Peabody held over US$10 billion in outstanding debt, including approximately US$4.3 billion in secured debt and US$4.5 billion in unsecured debt.

The greatest challenge to Peabody’s successful reorganization was a contractual dispute between Peabody, the Committee, and certain of Peabody’s secured lenders, including Citibank, N.A. in its capacity as administrative agent under a prepetition credit agreement, regarding the extent and enforceability of the secured lenders’ purported security interests in Peabody’s larger coal mines. Citibank, N.A. was represented by Davis Polk & Wardwell LLP.

Curtis aggressively litigated the enforceability action on behalf of the Committee, which involved extensive discovery, pleadings, and a robust mediation process conducted before the Honorable James L. Garrity, Jr. of the U.S. Bankruptcy Court for the Southern District of New York. The dispute was consensually resolved as a result of the mediation, and was embodied in a settlement that provided greater recoveries for unsecured creditors. The settlement was the cornerstone of the over-arching global settlement at the heart of Peabody’s Chapter 11 Plan of Reorganization. The Plan was confirmed by the Bankruptcy Court in Missouri on March 17, 2017, and went into effect on April 3, 2017.

During Peabody’s notably quick emergence from Chapter 11, the company managed to (i) stabilize business operations, (ii) obtain postpetition financing, (iii) arrange US$1.95 billion in debt exit financing, and (iv) notably, negotiate and procure a US$1.5 billion new-money equity investment (an unprecedented amount for a coal company exiting bankruptcy).

Restructuring and Insolvency Chair Steven J. Reisman led a team including Restructuring and Insolvency Partner Cindi M. Giglio; Restructuring and Insolvency Litigation Partner Theresa A. Foudy; Litigation Partners Eliot Lauer, Peter J. Behmke, Michael J. Moscato and Julia B. Mosse; Restructuring and Insolvency Associates Peter J. Buenger, Allison J. Arotsky and Kyle J. TumSuden; and Litigation Associate Emily B. Cooper.

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