| CHICAGO, March 9
CHICAGO, March 9 Four individual investors of
Peabody Energy Corp are accusing the company, certain
hedge funds and other parties involved in the coal producer's
Chapter 11 bankruptcy of breaching their fiduciary duties,
according to a lawsuit filed on Thursday.
The four investors, who hold senior unsecured bonds of
Peabody, the largest U.S. coal miner, have alleged during the
Chapter 11 proceedings that they have been unfairly treated
under the reorganization plan.
Peabody has denied the allegations in the lawsuit, which was
filed with the U.S. Bankruptcy Court in St. Louis.
The investors also named as defendants the trustees of their
bonds and the Chapter 11 committee that represents their
At the heart of their complaint is a plan to raise $1.5
billion by selling stock in a reorganized Peabody. The
refinancing forms a key part of the company's plan to slash $5
billion of debt and exit Chapter 11 protection.
The stock is being offered to holders of the company's
unsecured bonds, except individual investors, denying them
potentially lucrative returns.
This violates the basic promise of bankruptcy that creditors
of equal standing receive equal treatment, they argue.
Peabody has about $4.5 billion of bonds outstanding, and the
lawsuit says individual investors hold up to 7 percent of those
The investors, who filed their lawsuit strictly on their own
behalf, requested a jury trial to address their complaints.
Peabody will ask U.S. Bankruptcy Judge Barry Schermer of St.
Louis to approve its plan to exit bankruptcy, which has wide
support from other creditors, on March 16.
(Reporting by Tracy Rucinski; Editing by Leslie Adler)