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On Friday, a lawyer representing the United Mine Workers of America told the U.S. Bankruptcy Court in St. Louis that union workers would be compelled to go on strike if Patriot Coal Corp voided its contract with the union.
Fred Perillo, the attorney representing the Patriot Coal mine workers’ union told Judge Kathy Suratt-States that the union is working earnestly to reach a consensual agreement with Patriot.
However, Patriot is trying to void its contract with the union and seeking $150 million worth of labor cuts a year, while the union is threatening to go on strike. Patriot is trying to end the contract, change healthcare, lower pay rates and end pension contributions, according to records.
Perillo told the court in clear words that the union stand was that if there was no contract, then there would be no work done by unionized workers.
Ben Hatfield, the CEO of Patriot said later that the comments made by the union’s attorney were poorly conceived.
Reuters reported that in an interview, the Patriot CEO said, “It’s a poor time to be throwing out threats,” referring to the comments of the union’s attorney. Hartfield said that a strike by UMWA would lead to a replay of what happened in the bankruptcy of Hostess Brands Inc, which liquidated last year after union strikes lead to heavy losses.
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Patriot Coal, which went into bankruptcy in July, has proposed transferring healthcare to a voluntary employees’ beneficiary association. It has also proposed stocking the VEBA with $15 million cash and $300 million worth of profit-sharing contributions.
While aiming to cease pension contributions and cut back expenses in other areas, the company has proposed to provide the union with a 35 percent equity stake in the company, which the union may sell off to the VEBA.
However, the company maintains that without the concessions and cuts the St. Louis based company had no other option but to liquidate.
On its part, the union keeps opposing the proposal as unfair.
The bankruptcy court has to decide the matter within May 29. While companies can impose cuts to labor contracts unilaterally under bankruptcy laws, such unilateral cuts need to be sufficiently substantiated by proving they are critical for survival of the company. Further, the company also has to prove that it has exhausted options of reaching consensual solutions.
