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Part I

Take warning

It was just another day at the Martwick Coal Mines in Central City, Kentucky, like so many Delbert Richie had seen in his 33 years working underground. He can’t remember what the weather was like or even what season it was. What he does remember is that his boss, General Superintendent Charles S. Jernigan, held him back that day while the rest of the miners headed below. Nearly 20 years later he recalls the conversation:

“He said, ‘Delbert, this is the way they’re gonna do it. They’re gonna create a fake coal company, and this fake coal company is gonna be, I don’t know what the name is gonna be, but they’re gonna put a name on it.’  He said, ‘It’s still gonna be Peabody, but Peabody’s gonna say it’s not theirs, and they’re gonna give all y’all away.’”

Richie is 68 years old, a compact, ruddy-faced man who still radiates energy. He served in the Army as a combat medic in Vietnam and after returning home, briefly retreated from society. “My head was sort of messed up, so I became a hermit,” he recalls now. “I lived by myself in an old bus out in the woods.”  Then he met his wife, Doris, the “pretty little girl that changed everything.”  He shaved his beard and cut his long hair and in April 1973 went to work for Peabody Energy — a job that he says now probably saved his life. “I always wanted to be a lawyer but through my Vietnam experience I was pretty much wasted. I just needed a job.”  He found Jernigan’s warning preposterous at the time; he couldn’t imagine how someone could dream up such a scenario.

But Peabody — the world’s largest private-sector coal company — did give Richie and 8,400 other retired miners away in 2007. The company spun off its eastern operations into a new company called Patriot Coal, a name Richie says was a slap in the face. “Of all the things in the world, to name something that you’re going to scam good coal miners out of, is to name your coal company Patriot.”

Things went well initially — the company’s stock quadrupled in value — but five years later, in 2012, Patriot entered Chapter 11 bankruptcy for the first time. Emerging with a clean balance sheet, divested of many of the obligations to pay out healthcare benefits to miners like Richie, the company re-entered the business with new management, only to file for Chapter 11 bankruptcy again 18 months later — the first in a wave of large coal company bankruptcies beginning in 2015. This time around, Patriot sold off its assets and ceased to exist.

The consequences of the bankruptcies were felt most acutely by Richie and his fellow retirees, many of whom had worked for Peabody for more than 30 years. Virtually none of them had worked a day for the spun-off company. These miners and the union that represents them believe that Peabody set Patriot up to fail as a ploy to rid itself of its obligation to pay their benefits — a claim the company denies. Now, many of these miners stand to lose their health insurance if Congress doesn’t act by the end of April.

The U.S. Bankruptcy Code is an attempt to introduce a measure of control into the Darwinian world of capitalism — a traffic cop at the intersection of economic security and creative destruction. To the uninitiated, its rules may seem arcane or unfair. Under ideal circumstances, they enable companies to eliminate some of their debt and move forward better able to compete. In many cases, however, people or companies that are owed money will get very little or nothing at all.

The Code offers little protection to the average worker. What protection it does offer, thanks to two provisions added in the 1980s, has often been used to discharge promises made to workers when times were good.

Babette Ceccotti — a recently retired partner at the Cohen, Weiss and Simon law firm in New York — has worked on bankruptcy cases in several industries during her 30-year career. For her, the fact that the Bankruptcy Code offers little protection to employees and retirees has a de-stabilizing effect on the whole economy.

“That story of the bankruptcy becomes, to a large degree, a story of a whole lot of loss being spread around, but it doesn’t deal with the fundamental problems that are affecting the industry,” said Ceccotti. “What happens, as we just saw in this election, lots of folks get left behind, or they get carried along through the next incarnation, but at vastly reduced standards of living, and there’s no recovery court.”

From the time of Jernigan’s warning, whether he knew it or now, Richie and his fellow miners were on a collision course with the U.S. Bankruptcy Code.

Daniel Flatley (@daniel_flatley) is a West Virginia native and a former Marine. He covered politics and government at a newspaper in upstate New York before attending the Columbia University Graduate School of Journalism, from which he will graduate in May 2017.

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