Kaye Scholer Clients Achieve Nearly Full Recovery
in Arch Coal Chapter 11 Proceeding

October 14, 2016

Kaye Scholer successfully represented an ad hoc group of secured Term Loan Lenders in Arch Coal’s bankruptcy case. The clients are expected to receive nearly 100 percent of the $1.9 billion par value of their loans to Arch Coal, a leader in the challenging US coal industry that emerged from bankruptcy on October 5, 2016.

Our clients were Term Lenders who were owed approximately $1.9 billion from Arch Coal which, prior to the restructuring, also had an additional $3 billion of unsecured note obligations. Their recovery reflects an increase in the value of their claims from approximately just 60 percent of par value at the time of our initial retention in June 2015 until October 2015 when Arch Coal emerged from court protection after winning court approval on a turnaround plan that cleared nearly $5 billion in debt from its books.

A cross-practice team of lawyers from Kaye Scholer’s Bankruptcy & Restructuring, Finance and Complex Commercial Litigation departments helped the clients recover near-full value of what was owed to them.

Led by Bankruptcy & Restructuring partners Mark Liscio, Mike Messersmith and Scott Talmadge, the team guided the Term Lenders through a 16-month process that included implementing a strategy to block a proposed debt exchange transaction that would have diluted the secured obligations owed our clients; litigating in New York State Supreme Court to defeat efforts by unsecured noteholders to impose an affirmative injunction limiting the rights of the Term Lenders; and negotiating and implementing a $275 million DIP facilities, an initial reorganization plan and subsequent multiparty settlement, and a new $325 million secured exit financing facility.

In addition to Liscio, Messersmith and Talmadge, the cross-practice team over the course of this successful representation included Litigation Department co-chair Jim Herschlein, special counsel Jim Catterson and associate Margaret Rogers; Bankruptcy & Restructuring counsel Seth Kleinman and associates Samantha Braunstein, Elise Neveau, Holly Martin and Kara Neaton; Finance partner Alan Glantz; Real Estate counsel Lauretta Moran and Corporate associate Connie Ericson.

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