Regulators argue the undisclosed liabilities increase the probability that the state will be left with claims under the surface-mining and other environmental laws.
Peabody Mining News
The company, however, has decided to stay away from thermal coal assets due mainly to uncertainties over demand linked to climate concerns.
The deal includes a 17% interest in the Port Kembla Coal Terminal, south of Sydney.
Peabody circulated a term sheet last week that implied the first lien debt would be impaired, prompting an organizational push, MINING.com has learned.
The coal giant also said it would review its assets in Australia to run a smaller but "more profitable" basis.
Alpha, which filed for bankruptcy in August last year, is scheduled to ask a federal judge Thursday to approve its exit plan despite objections to it.
Report claims that Walter Energy, Patriot Coal, Alpha Natural Resources, Arch Coal and Peabody Energy also allocated more than half a billion dollars for top executives salaries in decade before going bankrupt.
She is still trying to recover from her televised comments in March, when she said she would put coal companies and miners out of business.
Peabody's bankruptcy filing is one of the largest in the commodities sector since commodity prices began to fall in the middle of 2014.
"Substantial doubts" St-Louis-based Peabody Energy with history traced back to 1883 can continue as going concern after missing payment on $6 billion debt.