Trustees of the United Mine Workers of America pension plan sued, on August 6, a Bahamian insurance company with alleged ties to bankrupt Walter Energy, asking for payment of $933.94 million in coal miner pension contributions.
The complaint, filed in U.S. District Court for the District of Columbia, says Cardem Insurance Co. Ltd., which underwrites workmen’s compensation policies, has on its board a majority of former employees with Walter Energy, the Birmingham-based coal mining company that sold off its assets in bankruptcy proceedings in 2016.
Walter Energy’s commitment to the pension fund was processed, in 2015, as a withdrawal penalty through the Pension Benefit Guaranty Corp., the federal insurance agency set up to protect pensioners when their companies fold. Usually, over 80 percent of retirees get their full pension even after bankruptcy.
The plaintiff’s complaint aims at getting the court to declare the insurance company, which is still in business, as essentially one and the same as Walter Energy, as far as pension liabilities go.
“Defendant Cardem and Walter Energy were under ‘common control’ on the date of withdrawal” of Walter Energy from the pension obligation under bankruptcy, said the plaintiffs, thus “are a single employer for withdrawal liability purposes, and therefore are jointly and severally liable for the withdrawal liability of Walter Energy.”
The complaint also avows “employees of Walter Energy, a U.S. corporation, have historically constituted the majority of Cardem’s board of directors.”
The PBGC, in December 2015, resolved to pay retirement benefits for more than 2,700 current and future retirees at Walter Energy. The agency stepped in because Walter Energy planned to sell the majority of its assets in bankruptcy.
On April 1, 2016, Walter Energy sold its metallurgical coal mines to Warrior Met Coal, a company organized by former Walter Energy executives.
The CEO of Warrior Met, a public company based in Birmingham, is Walter Scheller, who was the CEO of Walter Energy from September 2011 to March 2016 and was president and COO of Walter Energy’s primary subsidiary, Jim Walter Resources Inc., from June 2010 to September 2011.
The union trustees’ complaint says it offered Cardem Insurance a monthly payment plan on the $933.94 million they say the company owes but got no response by the time the first installment came due on July 2, 2018.
