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April 07, 2017

Peabody Plan Takes Effect: Kramer Levin Represents Co-Proponents that Backstopped Groundbreaking $1.5 Billion Equity Raise

The effective date of Peabody Energy Corporation’s Chapter 11 plan of reorganization took place on April 3, 2017. The Kramer Levin represented Elliott Capital Management and another investment firm as holders of unsecured notes before and during the Chapter 11 case, which was one of the largest bankruptcy filings in 2016. Kramer Levin’s clients participated in Peabody’s DIP financing, litigation regarding contractual terms to determine whether over $1 billion in assets were secured or unsecured, and comprehensive mediation that achieved a settlement of the contract dispute and agreement across Peabody’s capital structure regarding the terms of a Chapter 11 plan. The foundation of the plan, which was supported overwhelmingly from every class of creditors, was a $1.5 billion equity raise. Kramer Levin’s clients were co-proponents of the plan and, along with several other holders of unsecured and second lien notes, agreed to backstop the entire $1.5 billion equity financing. This equity commitment is one of the largest in history for any Chapter 11 debtor, and it enabled distributions to unsecured creditors that were several times larger than the recoveries in other recent coal industry bankruptcies.

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