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Coal mining company may see Chapter 11 in its future

This week we continue our discussion on struggling businesses in the energy business. The mining business seems to be having a dark moment of its own. Recently, U.S. coal producer Peabody Energy Corp failed to meet an interest payment deadline. The payment was supposed to be in the amount of $71.1 million.

That default kicked off a 30-day grace period for the company to pay the debt. If it is not able to do so, the company may have to seek Chapter 11 bankruptcy protection, just like the company we discussed in our last post.

Other coal mining companies have also felt the heat due to tougher environmental controls, growing competition from other energy sources and a falling demand for coal. Peabody’s competitor Foresight Energy LP may also be in a similar predicament after it wasn’t able to reach a restructuring agreement with lenders.

When we take a look at these examples, it’s easy to see that sometimes there are circumstances out of our control that lead a company to suffer financially. A company, whether big or small, may do everything it can to restructure itself in order to pay its creditors. In the end, it may still end up having to file for Chapter 11 bankruptcy protection. This protection can be a crucial step for a company as it tries to figure out the best way to stay afloat financially. This time period may be exactly what a company needs in order to reorganize and get back on its feet.

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