A group of creditors of the Essar Group-owned coal company, Trinity Coal, have approached a US bankruptcy court seeking appointment of a Chapter 11 trustee arguing that they have lost faith in the ability of its owners to turnaround the company.
The involuntary bankruptcy case against Trinity Coal, which was acquired by the Essar group in 2010 for $600 million, was filed in a US Bankruptcy Court in Lexington, Kentucky last week, according to publicly available documents seen by PTI.
“Trinity’s current management has failed to negotiate with Trinity’s creditors,” Credit Agricole said in its court papers as it sought the appointment of a Chapter 11 trustee.
In the court papers, the creditors claimed that Trinity Coal Corp owes them $104 million.
A person who did not wish to be identified said: “Trinity Coal has both steam and metallurgical coal reserves. Due to cheap availability of shale gas, steam coal business is under pressure all over the US.
“Trinity has brought down its debt significantly over the last three years since acquisition. Because of steam coal, it has become necessary to restructure the business of Trinity.”
“Accordingly, the company is in negotiations with lenders and proposes to reorganise under Chapter 11 which is the route for settlement in such circumstances,” the person added.
The company spokesperson didn’t respond to the e-mail query till going to the press.