Blackjewel left 1,700 coal miners unpaid when its lender refused one loan extension

On July 1, 2019, Blackjewel — a coal operator with 32 mines and about 1,700 employees in Central Appalachia and Wyoming — filed Chapter 11 in Charleston, West Virginia, five days after Riverstone declined to extend a $34 million term loan. It had been in covenant default since December 2018. Payroll failed at once: Wyoming miners’ checks bounced, Appalachian pay went unfunded when first-day DIP financing fell through, and 401(k) deductions were never remitted. On July 29, laid-off miners blockaded a train of sold coal from a Harlan County, Kentucky mine; the camp held 59 days.

The structure made payroll failure almost mechanical. The 2017 BJMS joint venture with Javelin Global Commodities and Uniper held all marketing receivables outside the operating company, so Blackjewel depended on counterparties to release its own cash. Founder-CEO Jeff Hoops held about $11 million in unsecured insider loans plus a $5 million interest-free tranche inside the Riverstone facility, and family-tied companies later filed $24.5 million in claims. The company also skipped the protections built for this moment: no 60-day WARN notice, and no Kentucky wage bond.

The unwind was quick. The Department of Labor invoked the FLSA ‘hot goods’ doctrine to freeze the blockaded coal; two DIP attempts failed in 48 hours, and the junior $2.9 million facility came at LIBOR plus 12.5%. Operations went by asset sales: Contura Energy took the Pax surface mine, and Eagle Specialty Materials bought the Belle Ayr and Eagle Butte mines for $16.2 million cash, with Contura paying ESM $90 million and replacing $238 million in surety bonds. A $5.475 million settlement funded by the BJMS venture paid $5.1 million of back wages to about 1,100 workers — $4,202.91 on average.

The liquidating plan was confirmed on March 22, 2021, projecting 0–15% recovery on $292–364 million of unsecured claims. The blockade ended only after the last protesters found other work; pay arrived in October 2019 through consent judgments in three states.

Bounced paychecks for 1,700 workers; ~$5.1M back-pay settlements; unsecured creditors projected 0–15%; 33 mine permits abandoned with ~$41M reclamation unpaid

Liquidity rested on one lender's forbearance: covenant default from December 2018, then five days' notice between Riverstone's refusal and the petition.

The BJMS marketing joint venture held Blackjewel's receivables outside the operating company, so the operator could not reach its own cash when payroll came due.

Related-party claims ran ahead of workers: about $11M of Hoops insider loans, a $5M interest-free tranche, and rent owed between Hoops-owned entities.

The cheap protections were skipped — WARN notice and Kentucky's wage bond — leaving bounced checks as the first signal 1,700 workers got of the collapse.

Payroll funded by lender forbearance is already lost payroll. Outside-venture cash, founder loans, and no wage bond left workers absorbing the capital failure.

The estate accused Hoops of fraud and self-dealing over pre-petition transfers. The 2021 WARN class settlement recognized $14.6M in priority claims plus $2.7M in wage claims. A judge later authorized abandoning 33 West Virginia permits, leaving states and sureties an estimated $41M in reclamation. In 2024 the Department of Labor won $637,014 in restitution from former 401(k) trustees. Professional fees reached about $30.8M and the Liquidation Trust runs to April 2027, while Hoops’ own $24.5M in claims stayed in the queue.