July 9, 2019, Southern District of Western Virginia – Earlier this month, Coal giant Blackjewel, LLC, apparently one of the largest coal companies in the US by sales volume made an emergency bankruptcy filing. The company also closed its two large operations in the Powder River Basin in Wyoming, resulting in hundreds of workers going home with paychecks bouncing.
As per papers filed in the court, Blackjewel’s CEO, Jeff Hoops, allegedly transferred money between Blackjewel and his personal accounts regularly. According to the bankruptcy testimony of Hoop, he exchanged transfers worth $79 million between Blackjewel and his accounts in the year before the bankruptcy filing. Hoops alleges that he transferred $45 million into the company, and $34 million out of it – meaning that, by Hoops’ accounting, Blackjewel still owed him $11 million. Many of the transfers seemed suspicious as he allegedly sometimes transferred money into and out of Blackjewel on the same day, presumably to prevent specific checks from bouncing. Under the bankruptcy code, any payments made to an insider such as CEO, before a company declares bankruptcy fell within the range of preferential payments.
As a result, the alleged payments could signify that Hoops preferred to pay off his own loans before paying off any other creditors. So, we can expect Blackjewel’s creditors to bring adversary proceedings shortly to clawback up to $34 million in transfers that Hoops made from Blackjewel to his private accounts.
Black jewel and its affiliates make up one of the largest coal producers in the nation, with about 1,100 miners in Kentucky, Virginia and West Virginia, and another 600 miners in the western US.