The company had a highly levered capital structure that could not be sustained in light of their declining operating performance resulting from the competitive and challenging macroeconomic environment. The company had made a major acquisition 3 years prior incurring substantial debt at the time. Following that acquisition, domestic demand for coal had decreased dramatically, in large part because alternative sources of energy became increasingly attractive to electricity generators in light of declining natural gas prices and more burdensome environmental and other governmental regulations. The coal mining company filed Chapter 11 with the expectation of a successful sale effort for part or all of the company. Unfortunately, little interest surfaced during the first 2 months following the filing, and the creditors lost confidence in the ability of senior management to address the multiple Chapter 11 dynamics facing them, including the potential for senior secured debtor-in-possession lenders recovering less than the original principal provided to the company.
William Murphy was retained as the Chief Restructuring Officer to advise and provide regular financial reports to senior management and the Board of Directors in developing an orderly wind-down plan for the Company. Specific duties included oversight and assistance with day-to-day cash management decisions, preparation of financial forecasts/budgets of the Company and advise and assist with the implementation of the wind-down plan. In addition, William Murphy was responsible for lender and Creditor Committee relationships, and other financial reporting and negotiations that were necessary during the Chapter 11 and wind-down process.
Under William Murphy’s leadership, the winddown plan was negotiated and implemented resulting in full recovery of principal, interest and fees to the secured lenders and a distribution to the unsecured creditors. All of the operations were acquired by third parties, initially preserving in excess of 75% of the employee jobs.