Lender says Murray violated deal in ‘brazen’ loan default
Murray Energy allegedly violated a bankruptcy financing agreement after manipulating financial information, according to court papers filed by one of its lenders.
GACP Finance, owed some $90-million under a loan tied up in Murray Energy’s bankruptcy financing package, delivered a notice of default to the coal miner on Wednesday, court papers show. The lender alleges Murray improperly included noncoal receivables in a financial report in an attempt to remain compliant with a credit agreement.
The lender is seeking a court order barring anyone from interfering with its ability to freeze the Murray Energy bank accounts that serve as collateral for its loan. GACP called Murray’s actions a “brazen attempt” to “improperly manipulate” the weekly financial report, adding the current assets underpinning its loan “are rapidly disappearing at an alarming rate.”
Murray Energy, America’s largest privately-held coal producer, filed for bankruptcy in October following a years-long decline in demand for coal. Rival coal producer Consol Energy is urging a bankruptcy judge to convert Murray’s case to Chapter 7, a liquidation. Murray itself previously said it may have to liquidate unless it could cut health-care payments to retirees.
A representative for Murray didn’t immediately respond to requests for comment. A GACP representative declined to comment beyond the court filings.
The case is Murray Energy Holdings Co., 19-bk-56885, US Bankruptcy Court Southern District of Ohio (Columbus).
(By Jeremy Hill)