Executives with Indiana-based coal company American Resources Corporation will face daily fines of $2,500 if they continue to flout court orders, according to filings in the bankruptcy case of Cambrian Coal.
The order comes after ARC failed to pay electric utility bills, employee back pay and benefits, and other liabilities it purchased from Cambrian last fall, even after receiving millions of dollars from the federal government’s coronavirus relief aid.
ARC must pay the daily fee if it fails to pay $1,067,736 in court-ordered payments by June 1. Executives would also have to appear in court to face additional sanctions, including possible incarceration. Incarceration for failure to pay is the highest sanction available to bankruptcy judges and is exceedingly rare.
ARC received $2.7 million in loans from the federal government this April through the Small Business Administration’s Paycheck Protection Program. The loan is forgivable if used on employee retention, so ARC would forego that loan forgiveness if it chose to spend the money on court-ordered payments.
ARC attorney Billy Shelton told the court earlier this month that the purchased mines had barely produced any coal, making it difficult to pay outstanding debts.
Coal miners employed by ARC subsidiary Quest Energy made news over the winter when they held a three-day-long railroad blockade to protest lost wages.
Cambrian is among dozens of coal companies declaring bankruptcy amid a historic collapse of the coal industry in recent years. The coronavirus pandemic has hastened the decline in demand for coal.