Washington: A group of creditors of Essar Group-owned coal company, Trinity Coal, have approached a US bankruptcy court seeking appointment of a Chapter 11 trustee arguing that they have lost faith in the ability of its owners to turnaround the company.
The involuntary bankruptcy case against Trinity Coal, which was acquired by the Essar group in 2010 for USD 600 million, was filed in a US Bankruptcy Court in Lexington, Kentucky last week, as per the publicly available documents.
"Trinity's current management has failed to negotiate with Trinity's creditors," Credit Agricole said in its court papers as it sought the appointment of a Chapter 11 trustee.
In the court papers, the creditors claimed that Trinity Coal Corp owes them USD104 million.
A person who did not wish to identify said: "Trinity Coal has both steam and metallurgical coal reserves. Due to cheap availability of shale gas, steam coal business is under pressure all over the USA.
"Trinity has brought down its debt significantly over the last three years since acquisition. Because of steam coal, it has become necessary to restructure the business of Trinity."
"Accordingly, the company is in negotiations with various lenders and proposes to reorganise under Chapter 11 which is the route for settlement in such circumstances," the person added.
The company spokesperson didn't respond to the email query till going to the press.
First Published: Wednesday, February 27, 2013, 12:43