Patriot Coal Corp., et al. v. Peabody Holding Co., et al., No. 13-6031 (8th Cir. 2013)
Annotate this CaseIn this case, the parties disagreed about the nature of their dissolution agreement after one of them experienced a change in circumstances. Patriot Coal and Heritage Coal sought declaratory relief under 28 U.S.C. 2201 and Fed. R. Civ. P. 57, and requested a declaration that Peabody Holding's obligations with respect to the healthcare benefits owed to the Assumed Retirees would not be affected by modification of the benefits of retirees of Heritage or Eastern Associated under 11 U.S.C. 1114. The bankruptcy court denied relief and Patriot and Heritage appealed. While Heritage's rejection of its collective bargaining agreement relieved it of its contractual obligation to pay benefits, it still has a statutory obligation to pay those same benefits, at least until all of the steps of section 1114 are complied with. Therefore, the bankruptcy appellate panel (BAP) held that upon rejection of the "me too" agreement under section 1113, absent modification under section 1114, Heritage was still required to comply with the terms of the individual employer plan and provide its retirees those plan defined benefits; neither Heritage or United Mine Workers of America requested a modification; Peabody Holding's obligation under the liabilities assumption agreement remains undisturbed upon grant of the sections 1113 and 1114 motion; and Peabody Holding's remaining arguments lacked merit. Accordingly, the BAP reversed the decision of the bankruptcy court.
Court Description: Bankruptcy Appellate Panel. While Heritage Coal's rejection of its collective bargaining agreement relieves it of its contractual obligation to pay benefits, it still has a statutory obligation to pay those benefits, at least until all of the steps of Section 1114 are complied with; upon rejection of a "me too" agreement under Section 1113, absent modification under Section 1114, Heritage was required to comply with the terms of the individual employer plan and provide its retirees those plan defined benefits; here, neither Heritage nor the United Mine Workers requested a modification under Section 1114; Peabody Holding's obligation for benefits is also undisturbed. [ August 20, 2013
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