The announcement that Peabody Energy, the world’s largest non-government coal company, is to file for bankruptcy in the United States is one of more symbolic than substantive significance. In the U.S. context, bankruptcy is a fairly routine form of financial reorganization, rather than a prelude to liquidation.
Peabody sold about 250 million tons of coal in 2014 from mines in Australia and the United States.
The most important substantive effect is that Peabody may be able to avoid paying some of its debts, notably obligations to retired and retrenched coalminers and the cost of rehabilitating abandoned mines.
The operation of Peabody’s Australian mines is unlikely to be affected immediately. It was the purchase of these mines at inflated prices during the coal boom that tipped Peabody over the edge, though the end was, in some sense, inevitable.
