IN THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF DELEWARE
)
In Re: ) Chapter 11
)
LIGHTHOUSE RESOURCES INC., et al. ) Case No. 20–13056 (JTD) )
Debtors. ) (Jointly Administered) __________________________________________)
UNITED MINE WORKERS OF AMERICA’S OBJECTION TO DEBTORS’ MOTION FOR ENTRY OF AN ORDER (I) REJECTING THE COLLECTIVE BARGAINING AGREEMENT BETWEEN DECKER COAL COMPANY AND THE UNITED MINE WORKERS OF AMERICA AND (II) AUTHORIZING DEBTORS TO IMPLEMENT
THE TERMS OF DEBTORS’ PROPOSAL UNDER 11 U.S.C. § 1113(B)
The United Mine Workers of America (“UMWA”), the representative of the interests of the active and furloughed employees (the “UMWA Employees”) at the above-captioned Debtors’ mining operations, by and through its undersigned counsel, hereby submits this Objection (the “Objection”) to Debtors’ Motion for Entry of an Order (i) Rejecting the Collective
Bargaining Agreement Between Decker Coal Company and United Mine Workers of America and (ii) Authorizing Debtors to Implement the Terms of Debtors’ Proposal Under 11 U.S.C. § 1113(b) [Dkt. No. 247] (the “Motion”). In support of this Objection, the UMWA respectfully
represents as follows:
PRELIMINARY STATEMENT
1. The UMWA believes that the testimony before the Court on the Motion will reflect that the Debtor’s negotiations were carried out in bad faith, and did not meet the requirements of § 1113 of the Bankruptcy Code.
2. The Debtors’ § 1113 “proposal” presented to the UMWA on December 31, 2021 (the “Proposal”), provides for a series of modifications to the existing Collective Bargaining
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Agreement (“CBA”) that are speculative and have not been shown to be necessary for the future operations of the Debtor.
3. Section 1113 of the Bankruptcy Code permits a debtor to seek only “necessary modifications” to collective bargaining agreements that are absolutely necessary to permit the debtor to reorganize and emerge as a viable entity. The burden is on the Debtors to demonstrate the necessity of any proposed modifications, which may not seek concessions that meet a “wish list” of changes.
4. Here, the Debtors’ Proposal is simply a “take-it or leave-it” rejection of certain obligations owed pursuant to the UMWA CBA without any demonstration of necessity or good faith negotiations for modifications with the UMWA.
SUMMARY OF OBJECTION
5. Having engaged in a hollow bargaining process, the Debtors seek relief in the Motion that allows for unnecessary modifications of the UMWA CBA.
6. In contrast, (i) senior management received encouragement in the form of up to $1.5 million in KERP bonuses per quarter designed to extend beyond the proposed Sale closing – i.e., promises of further employment; (ii) the First Lien Lenders will receive control over the Debtors’ “good assets”; and (iii) trade creditors will continue to benefit from a mining customer.
7. The “negotiations” conducted between the parties were largely a regurgitation of the take it or leave it approach that has surrounded this case since its inception.
8. Before a debtor can seek relief under § 1113, the debtor must satisfy the substantive requirements of § 1113 and demonstrate the ability to confirm a chapter 11 plan. Here, in addition to failing to satisfy the requirements of § 1113, the Debtors fail to demonstrate the ability to confirm a chapter 11 plan.
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9. Aside from the plan confirmation issues, the Debtors fail to satisfy the fundamental substantive requirements contained in § 1113 for many reasons including, but not limited to, the following:
• A lack of adequate information; • A lack of demonstrated necessity; • A failure of fair and equitable treatment; • A failure to confer in good faith;
• A balance of equities weigh in favor of denial.
10. Accordingly, and for all the reasons set forth below, the Debtors’ Motion should be denied.
STATEMENT OF FACTS
11. The Union Employees are covered by a 2012 collective bargaining agreement (“CBA”) between the UMWA and Decker Coal.
12. The Debtors speculate that mining will cease at the Decker Mine sometime in early 2021 when DTE Electric Company will no longer purchase coal from Decker Mine. [Dkt. 247, ¶ 17]. At that point, the Debtors further speculate, the mining land reclamation process will commence. Reclamation is critical for the Debtors to continue to operate pursuant to necessary licenses for operation. Further, as reclamation of property is successful, cash currently held in surety bonds are to be released back to the Debtor.
13. The modification of the CBA will create a substantial hardship for the UMWA employees and their families who have labored for years at these facilities.
4 ARGUMENT
I. THE DEBTORS FAIL TO MEET THE SUBSTANTIVE REQUIREMENTS OF BANKRUPTCY
CODE SECTION 1113.
14. Section 1113 of the Bankruptcy Code limits the right of a debtor in possession to reject a collective bargaining agreement and requires the following under section 1113 subsections (b) and (c):
(b)(1) Subsequent to filing a petition and prior to filing an application seeking rejection of a collective bargaining agreement, the debtor in possession or trustee (hereinafter in this section “trustee” shall include a debtor in possession), shall—
(A) make a proposal to the authorized representative of the employees covered by such agreement, based on the most complete and reliable information available at the time of such proposal, which provides for those necessary modifications in the employees benefits and protections that are necessary to permit the reorganization of the debtor and assures that all creditors, the debtor and all of the affected parties are treated fairly and equitably; and
(B) provide, subject to subsection (d)(3), the representative of the employees with such relevant information as is necessary to evaluate the proposal.
(2) During the period beginning on the date of the making of a proposal provided for in paragraph (1) and ending on the date of the hearing provided for in subsection (d)(1), the [debtor in possession] shall meet, at reasonable times, with the authorized representative to confer in good faith in attempting to reach mutually satisfactory modifications of such agreement.
(c) The court shall approve an application for rejection of a collective bargaining agreement only if the court finds that—
(1) the [debtor in possession] has, prior to the hearing, made a proposal that fulfills the requirements of subsection (b)(1);
(2) the authorized representative of the employees has refused to accept such proposal without good cause; and
5 11 U.S.C. § 1113(b)-(c).
15. Specifically, under § 1113, a debtor may reject a collective bargaining agreement only if the court determines “(1) the debtor has made a proposal to its employees which provides for those necessary modifications in the employees benefits and protections that are necessary to permit the reorganization, (2) the authorized representative of the employees has refused to accept such proposal without good cause, and (3) the balance of the equities clearly favors rejection of such agreement.” In re Trump Entm't Resorts, 810 F.3d 161, 168 (3d Cir. 2016) (internal quotations omitted). “Section 1113 explicitly forbids debtors from ‘terminat[ing] or alter[ing] any provisions of a collective bargaining agreement prior to compliance with the provisions’ of § 1113.” Id. (quoting 11 U.S.C. § 1113(f)).
16. In order to determine if a debtor has satisfied these requirements, courts utilize a nine part test first developed in In re American Provision Co., 44 B.R. 907, 909 (Bankr. D. Minn. 1984) (“While § 1113 is not a masterpiece of draftsmanship, I think nine requirements for court approval of the rejection of collective bargaining agreements can be gleaned from § 1113.”). See also Wheeling-Pittsburg Steel Corp. v. U. Steelworkers of Am., AFL-CIO-CLC, 791 F.2d 1074, 1080 (3d Cir. 1986) (approving Bankruptcy Court’s use of the “nine-step process first enunciated in In re American Provision”); In re Liberty Cab & Limousine Co. Inc., 194 B.R. 770, 776 (Bankr. E.D. Pa. 1996) (denying debtor’s proposed § 1113 modifications where Debtor failed to make a sufficient showing as to all nine American Provision elements); In re Texas
Sheet Metals, Inc., 90 B.R. 260, 263 (S.D. Tex. 1988) (stating the court must find all nine American Provision elements satisfied before it can allow rejection of CBAs).
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17. The nine American Provision elements are:
1. The debtor-in-possession must make a proposal to the Union to modify the collective bargaining agreement.
2. The proposal must be based on the most complete and reliable information available at the time it is made.
3. The proposed modifications must be necessary to permit the debtor’s reorganization.
4. The proposed modifications must assure that all creditors, the debtor and all of the affected parties are treated fairly and equitably.
5. The debtor must provide to the union such relevant information as is necessary to evaluate the proposal.
6. Between the time of the making of the proposal and the time of the hearing on approval of the rejection of the existing collective bargaining agreement, the debtor must meet at reasonable times with the union. 7. At the meetings the debtor must confer in good faith in an attempt to reach
mutually satisfactory modifications of the collective bargaining agreement.
8. The union must have refused to accept the proposal without good cause. 9. The balance of the equities must clearly favor rejection of the collective
bargaining agreement.
In re Liberty Cab & Limousine Co. Inc., 194 B.R. at 776.
18. The Debtors have the burden of proving each element required for rejection of a CBA. Id. See also In re Pariot Coal Corp., 493 B.R. 65, 112 (Bankr. E.D. Mo. 2013).
19. If even one of the nine elements is missing, the application must be denied.
UFCW Local 211 v. Family Snacks, Inc. (In re Family Snacks Inc.), 257 B.R. 884, 898 (8th Cir.
B.A.P. 2001); In re U. S. Truck Co. Holdings, No. , 2000 WL 1580098, at *11 (Bankr. E.D. Mich. Sept. 29, 2000) (citing In re Walway, 69 B.R. 967, 972 (Bankr. E.D. Mich. 1987)).
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A. Debtors’ Proposal was Not Based on the Most Complete and Reliable Information Available at the Time of the Proposal.
20. Bankruptcy Code section 1113(b)(1)(A) requires that, subsequent to filing a petition and prior to filing an application seeking rejection of a collective bargaining agreement, the debtor in possession shall make a proposal “based on the most complete and reliable information available at the time of such proposal.” 11 U.S.C. § 1113(b)(1)(A).
21. In determining whether a debtor’s proposal was based on complete and reliable information, courts have held that the information upon which the proposal was based must be “firmly grounded in the historic reality of operational economics, an unvarnished evaluation of [the debtor’s] current straights, and a thorough analysis of all of the incidents of income and expense that would bear on [the debtor's] ability to maintain a going concern in the future.” In re
Mesaba Aviation, Inc., 341 B.R. 693, 712-13 (Bankr. D. Minn. 2006).
22. In fact, “[t]he data provided by the debtors should reflect an honest effort to compile all data, with no deliberately concealed mistakes” and “should exclude ‘hopeful wishes, mere possibilities, and speculation.’” In re Patriot Coal Corp., 493 B.R. at 114-15. See also
Truck Drivers Local 807 v. Carey Transportation Inc., 816 F.2d 82, 89 (2d Cir. 1987)
(explaining that it is “impossible to weigh necessity as to reorganization without looking into the debtor's ultimate future and estimating what the debtor needs to attain financial health”).
23. In In re G & C Foundry Co., 2006 Bankr. LEXIS 4582, at *24 (Bankr. N.D. Ohio July 19, 2006), the court held that the debtor failed to demonstrate its proposal was based on the most complete and reliable information available at the time of the proposal where the debtor based its proposal on its “zero-based budgeting analysis and simply took a snapshot view of its current financial situation.” The court added that the limited presentation of the revenue side of
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the debtor’s finances as a basis for rejection of the collective bargaining agreement was especially inadequate where the proposed changes were permanent. Id. at *27.
24. Here, the Debtor has classically engaged in a process that can be described as “Ready, Fire, Aim”. Rather than parade fulsome information prior to and during negotiations with the UMWA, the Debtor has provided a rolling script of self-selected data that has continued even after the filing of the Motion.
B. Debtors’ Proposed Rejection and Modifications are not Necessary to Reorganization.
25. “Section 1113 explicitly forbids debtors from ‘terminat[ing] or alter[ing] any provisions of a collective bargaining agreement prior to compliance with the provisions’ of § 1113.” In re Trump Entm't Resorts, 810 F.3d at 168 (3d Cir. 2016) (quoting 11 U.S.C. § 1113(f)). Congress placed the word “necessary” twice in this section deliberately to emphasize the very limited nature of the changes allowed. See 130 Cong. Rec. S8898 (daily ed. June 29, 1984) (Remarks of Sen. Packwood) (“The word ‘necessary’ inserted twice into this provision clearly emphasizes this required aspect of the proposal”); In re Century Brass Prods., Inc., 795 F.2d 265, 273 (2d Cir. 1986).
26. This “necessary” standard “cannot be satisfied by a mere showing that it would be desirable for the [debtor] to reject a prevailing labor contract so that the debtor can lower its costs. Such an indulgent standard would inadequately differentiate between labor contracts, which Congress sought to protect, and other commercial contracts, which the [debtor in possession] can disavow at will.” Wheeling-Pittsburg Steel, 791 F.2d at 1088.
27. A debtor has the “burden to demonstrate that each of its proposed modifications, both economic and non-economic, are necessary to its business plan.” In re AMR Corp., 477 B.R. 384, 411 (Bankr. S.D.N.Y. 2012) (emphasis added) (quoting Teamsters Nat’l Freight Indus.
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Negotiating Comm. v. Howard’s Express, Inc. (In re Howard’s Express, Inc.), 151 F. App’x. 46,
49 (2d Cir. 2005)). A union has good cause to refuse to accept unnecessary changes.
28. Generally, courts look to whether a debtor’s proposed changes are narrowly tailored, and whether there is a causal connection between the proposed modification and the debtor’s financial condition. See In re Mile Hi Metal Systems, Inc., 899 F. 2d 887, 893 (10th Cir. 1990) (“the debtor may not overreach under the guise of proposing necessary modifications. [T]he proposals must be more than potentially helpful; they must be directly related to the debtor’s financial condition.”) (footnote omitted); In re Pierce Terminal Warehouse, Inc., 133 B.R. 639, 647 (Bankr. N.D. Iowa 1991) (explaining the court must consider whether the employer “has sought changes to the contract which materially exceed such needs. The result of such overreaching is that rejection will be prohibited”). “The debtor cannot propose changes that go beyond the ‘demonstrated necessity.’” In re Patriot Coal Corp., 493 B.R. at 126.
29. Importantly, when a proposal under § 1113(b) is speculatively “predicated on a worst-case economic scenario,” there is “no basis from which the bankruptcy court [can] hypothesize a possible need for modification.” Wheeling-Pittsburg Steel, 791 F.2d at 1093.)
30. In this case, the Proposal calls for various modifications of the CBA which the Debtor asserts may have an incremental cost-saving value. In contrast, the Debtor has failed to identify similar cost savings that may be captured from their non-unionized workforce.
31. Importantly, the Debtors’ fear of the future is based upon a worst-case scenario speculation that if the Pension Plan fund performs poorly, the Debtors’ could be required “to make large contributions to the Pension Plan, amounting to hundreds of thousands or even millions of dollars” and force the Debtors into liquidation. [Dkt. 247, ¶¶ 32-33]. This is a smoke screen, as Debtors provide zero substantiation for this hypothetical. To the contrary, the Debtors
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acknowledge that they “were not required to make contributions to the fund in 2019 or 2020.” Id. at ¶ 37.
32. The Debtors are only entitled to the quantum of relief that would allow it to emerge as a viable enterprise – not one that can withstand the worst-case, speculative imaginings of the debtor. Debtors fail to make any concrete showing as to the future operations and financial performance of the assets, and the request for drastic and permanent relief is not warranted.
C. The Debtors’ Proposal Does Not Treat All Parties Fairly and Equitably. 33. The Debtors, all creditors, and all affected parties must be treated fairly and equitably. Wheeling-Pittsburg Steel, 791 F.2d at 1091 (reversing bankruptcy court’s rejection of CBA because provisions in proposed modifications for labor and wage reduction did not affect union employees and non-union employees equally).
34. The purpose of this requirement is “to spread the burden of saving the company to every constituency while ensuring that all sacrifice to a similar degree.” In re Patriot Coal Corp., 493 B.R. at 130; Century Brass, 795 F. 2d at 273. Moreover, “[t]he debtor should only seek concessions from the unionized labor force after exhausting other means of cost-savings for the company” and “must show that it has not placed a disproportionate share of the financial burden of avoiding liquidation upon the union or retirees.” In re Patriot Coal Corp., 493 B.R. at 130-31 (citations and internal punctuation omitted).
35. Equity requires that the unionized employees not be the sole target of cost reductions and that there be some cost-cutting measures by management in connection with a chapter 11 filing. See Wheeling-Pittsburg Steel, 791 F.2d at 1091 (reversing bankruptcy court’s rejection of CBA because provisions in proposed modifications for labor and wage reduction did
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not affect union employees and non-union employees equally); In re William P. Brogna & Co., 64 B.R. 390, 392 (Bankr. E.D Pa. 1986) (denying debtors’ proposal because it “exact[ed] more of an economic tribute from [union employees] than from the debtor and from other creditors of the debtor”).1
36. Modifications do not treat parties equitably and fairly where the debtor’s non-union employees and its top management take no reduction in salary and receive bonuses while, at the same time, attempts to reject the collective bargaining agreement. In re In. Grocery Co., 136 B.R. 182, 195-96 (Bankr. S.D. Ind. 1990). In Indiana Grocery, the court disallowed rejection of the collective bargaining agreement where “in light of the serious financial problems, the debtor failed to demonstrate that managers and creditors were bearing their share of the burden in the debtor’s reorganization.” Id.
37. Similarly, in In re Lady H Coal Co., 193 B.R. 233, 242 (Bankr. S.D.W. Va. 1996), the court held the debtors’ proposal was not fair and equitable where future compensation negotiated by the officers in the form of consulting and non-compete agreements which totaled $150,000 per officer was “at the cost of the rights of the represented employees,” and thus, was unjust and unacceptable “in light of the officers total disregard for other employees of the Debtors.” Id.. See also In re Mesaba Aviation, Inc., 350 B.R. 435, 460-62 (D. Minn. 2006) (revising bankruptcy court’s granting of Section 1113 relief because court failed to consider how the owner of the debtor shared the burdens of reorganization); In re Jefley, Inc., 219 B.R. 88, 93-94 (Bankr. E.D. Pa. 1998) (holding continued receipt of high salaries by debtor’s principals prevents court from concluding that proposal was fair and equitable to union employees); In re
Walway, 69 B.R. 967, 973 n.15 (E.D. Mich. 1987) (“In most cases, a financially troubled
1 See also In re Carey Transp., Inc., 50 B.R. 203, 210 (Bankr. S.D.N.Y. 1985); In re Allied Delivery Sys., Inc., 49
B.R. 700, 702 (Bankr. N.D. Ohio 1985); In re Lady H Coal Co., 193 B.R. 233, 242 (Bankr. S.D. W.Va. 1996); In re
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company should consider rejection of a labor contract as a last resort to help the company survive. The history of the collective bargaining agreement and its special treatment and protection lends support to this conclusion”)
38. Here, the UMWA Employees are being asked to shoulder a disproportionate share of the financial sacrifice. The Debtors in their discussions or pleadings identify any other employees who are being asked to make comparative sacrifices.
D. The Debtor Did Not Confer in Good Faith to Reach Mutually Satisfactory Modifications.
39. A debtor is required to “confer in good faith in attempting to reach mutually satisfactory modifications of the [collective bargaining] agreement.” 11 U.S.C. § 1113(b)(2). Where the debtor has met its burden with respect to meeting with union representatives, the burden of production on this factor shifts to the union. See American Provision, 44 B.R. at 910. “Good faith bargaining is conduct indicating an honest purpose to arrive at an agreement as the result of the bargaining process.” Walway Co., 69 B.R. at 973.
40. “Good faith means more than merely going through the motions of negotiating: it is inconsistent with a predetermined resolve not to budge from an initial position.” NLRB v.
Truitt Mfg. Co., 351 U.S. 149 (1956) (Black, J., concurring); NLRB v. Sw. Porcelain Steel Corp.,
317 F.2d 527, 528 (10th Cir. 1963) (“[T]he parties can bargain, even to impasse on positions fairly maintained . . . But, they may not come to the bargaining table with a closed mind, i.e., a predetermined disposition not to bargain.”).2
2 See also Sweeney & Co. v. NLRB, 437 F.2d 1127, 1134 (5th Cir. 1971) (recognizing “bad faith is prohibited [in the
collective bargaining process] though done with sophistication and finesse” and good faith “takes more than ‘surface bargaining,’ or ‘shadow boxing to a draw,’ or ‘giving the Union a runaround while purporting to be meeting with the Union for purposes of collective bargaining’”); Kellwood Co., Ottenheimer Div. v. NLRB, 434 F.2d 1069, 1072 (8th Cir. 1970) (stating that “one party [who] makes it virtually impossible for him to respond to the other – knowing that he has done so deliberately – should be condemned by the same rationale that prohibits ‘going through the motions’ with a ‘predetermined resolve not to budge from an initial positions’”); NLRB. v. Gen. Elec. Co., 418 F.2d 736, 762 (2d Cir. 1969) (same).
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41. Take-it-or-leave-it offers do not constitute good faith negotiation. See, e.g., N. L.
R. B. v. Ins. Agents' Int'l Union, AFL-CIO, 361 U.S. 477, 485, 80 S. Ct. 419, 425, 4 L. Ed. 2d
454 (1960) (“Collective bargaining, then, is not simply an occasion for purely formal meetings between management and labor, while each maintains an attitude of ‘take it or leave it’; it presupposes a desire to reach ultimate agreement, to enter into a collective bargaining contract.”); In re Liberty Cab & Limousine Co., Inc., 194 B.R. at 776–77 (criticizing a debtor’s “take it or leave it attitude” and denying rejection of a CBA).
42. The Union must also have fulsome access to documents necessary to evaluate the Debtors’ proposal in order for good-faith bargaining to take place. Failure to supply meaningful financial documentation “undermine[s] the negotiation process.” In re Liberty Cab & Limousine
Co., Inc., 194 B.R. 770, 776–77 (Bankr. E.D. Pa. 1996).
43. Simply stated, the Ready-Fire-Aim approach to bargaining does not meet the statutory requirements of the Bankruptcy Code.
E. The Balance of the Equities Does not Clearly Favor Rejection of the Collective Bargaining Agreements.
44. Finally, balancing of the equities must “clearly favor rejection of the collective bargaining agreement.” 11 U.S.C. § 1113(c)(2). The “balancing of equities” factor derives from the standard enunciated in NLRB v. Bildisco, 465 U.S. 513, 104 (1984). In Bildisco, the Supreme Court held that the bankruptcy court must focus on the ultimate goal of chapter 11, successful reorganization, and how the equities relate to the success of the reorganization.” 465 U.S. at 526-27. In Carey Transportation, the Second Circuit set forth six “permissible equitable considerations” for determining whether the balance of equities favors rejection:
(1) the likelihood and consequences of liquidation if rejection is not permitted;
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(2) the likely reduction in the value of creditors' claims if the bargaining agreement remains in force;
(3) the likelihood and consequences of a strike if the bargaining agreement is voided;
(4) the possibility and likely effect of any employee claims for breach of contract if rejection is approved;
(5) the cost-spreading abilities of the various parties, taking into account the number of employees covered by the bargaining agreement and how various employees' wages and benefits compare to those of others in the industry; and
(6) the good or bad faith of the parties in dealing with the debtor's financial dilemma.
Truck Drivers Local 807, Int'l Bhd. of Teamsters, Chauffeurs, Warehousemen & Helpers of Am. v. Carey Transp. Inc., 816 F.2d 82, 93 (2d Cir. 1987).
45. A union’s right to strike after a bankruptcy court approves rejection of a collective bargaining agreement is well established, and this right cannot be enjoined by a bankruptcy court. See Briggs Transp. Co. v. Int’l Bhd. of Teamsters, 739 F.2d 341, 344 (8th Cir. 1984) (rejecting employer’s request for injunctive relief against union picketing after rejection of CBA); Northwest Airlines Corp. v. Assn. of Flight Attendants—CWA, AFL—CIO (In re
Northwest Airlines Corp.), 483 F.3d 160, 173 (2d Cir. 2007) (indicating, in context of affirming
injunction against strike in airline case following rejection of CBA, that once a debtor obtains a section 1113 order granting the rejection of the CBA, a “union subject to the NLRA [which is not applicable in airlines cases] would become free to strike”); In re Royal Composing Room,
Inc., 62 B.R. 403, 405 (Bankr. S.D.N.Y. 1986) (“If the changes this Debtor imposes after
[section 1113] rejection are unacceptable, the employees are free to resign or strike”), aff’d, 78 B.R. 671 (S.D.N.Y. 1987), aff’d, 848 F.2d 345 (2d Cir. 1988); In re Evans Prods. Co., 55 B.R. 231, 234 (Bankr. S.D. Fla. 1985).
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46. International Brotherhood of Teamsters v. IML Freight, Inc., 789 F.2d 1460
(10th Cir. 1986), is particularly instructive here. There, the court reversed a bankruptcy court’s decision permitting the debtor to reject its collective bargaining agreement because the bankruptcy court failed to consider the impact of rejection. The court specifically noted that the antagonistic labor relations atmosphere make it likely that a damaging strike could result from rejection and explained as follows: “[T]he reality of the union’s strongly stated opposition was dismissed [by the bankruptcy judge] with an expression of hope that the debtor would reach an accommodation with its employees.” Id. at 1463.
47. Here, the possibility of labor unrest will only undermine the Plan and future operations. Given the current Proposal, the UMWA Employees may be left with no choice but to exercise their right to strike.
48. Simply put, granting the Motion will not reduce the likelihood of liquidation. The fact is that the Debtors are liquidating for the benefit of the Secured Lenders. In addition, the UMWA has acted in good faith considering the financial difficulties faced by the Debtors, while the Debtors have simply engaged in a take-it or leave-it approach by demanding nothing short of substantial modifications of the UMWA CBA. Under the circumstances, the course set by the Debtor may lead to labor unrest. Therefore, the balancing of equities strongly favors denying the Motion.
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CONCLUSION
WHEREFORE, PREMISES CONSIDERED, for all of the reasons stated above, the Debtors’ Motion to substantially modify the UMWA CBA should be denied.
Dated: January 27, 2021.
Respectfully submitted, /s/ R. Scott Williams
R. Scott Williams (admitted pro hac vice) Frederick D. Clarke, III (admitted pro hac vice) RUMBERGER, KIRK & CALDWELL, PC 2001 Park Place North, Suite 1300
Birmingham, Alabama 35203 Telephone: 205.327.5550 Facsimile: 205.326.6786 Email: swilliams@rumberger.com fclarke@rumberger.com -and- Claiborne S. Newlin Markowitz & Richman 123 South Broad Street Suite 2020
Philadelphia, PA 19109 Tel.: 215.875.3111 Fax: 215.790.0668
Email: cnewlin@markowitzandrichman.com
Counsel for the United Mine Workers of America
CERTIFICATE OF SERVICE
I hereby certify that on January 27, 2021, a true and correct copy of the foregoing was served via this Court’s CM/ECF Noticing System on all parties receiving electronic notices in this bankruptcy case.
/s/ R. Scott Williams
