IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION

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1 Case TOM11 Doc 300 Filed 07/31/15 Entered 07/31/15 16:00:35 Desc Main Document Page 1 of 6 IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ALABAMA SOUTHERN DIVISION In re: ) ) WALTER ENERGY, INC., et al ) Chapter 11 ) Debtors. 1 ) Case No TOM11 ) ) Jointly Administered ) ) MOTION TO ADD PENSION BENEFIT GUARANTY CORPORATION TO THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS PURSUANT TO 11 U.S.C. 1102(a)(4) Pension Benefit Guaranty Corporation ( PBGC ), a United States government agency, by its undersigned counsel, hereby moves the Court for entry of an order, pursuant to 11 U.S.C. 105(a), adding PBGC to the Official Committee of Unsecured Creditors Pursuant to 11 U.S.C. 1102(a)(4). In support of this motion, PBGC states the following: 1 The Debtors in these cases, along with the last four digits of each Debtor s federal tax identification number, are: Walter Energy, Inc. (9953); Atlantic Development and Capital, LLC (8121); Atlantic Leaseco, LLC (5308); Blue Creek Coal Sales, Inc. (6986); Blue Creek Energy, Inc. (0986); J.W. Walter, Inc. (0648); Jefferson Warrior Railroad Company, Inc. (3200); Jim Walter Homes, LLC (4589); Jim Walter Resources, Inc. (1186); Maple Coal Co., LLC (6791); Sloss-Sheffield Steel & Iron Company (4884); SP Machine, Inc. (9945); Taft Coal Sales & Associates, Inc. (8731); Tuscaloosa Resources, Inc. (4869); V Manufacturing Company (9790); Walter Black Warrior Basin LLC (5973); Walter Coke, Inc. (9791); Walter Energy Holdings, LLC (1596); Walter Exploration & Production LLC (5786); Walter Home Improvement, Inc. (1633); Walter Land Company (7709); Walter Minerals, Inc. (9714); and Walter Natural Gas, LLC (1198). The location of the Debtors corporate headquarters is 3000 Riverchase Galleria, Suite 1700, Birmingham, Alabama

2 Case TOM11 Doc 300 Filed 07/31/15 Entered 07/31/15 16:00:35 Desc Main Document Page 2 of 6 BACKGROUND 1. On July 23, 2015, PBGC faxed a completed Committee Questionnaire to the Bankruptcy Administrator. The contents of the fax, including the Fax Cover Page, Committee Questionnaire, Cover Letter, and Transmission Confirmation are attached as Exhibit On July 30, 2015, the Bankruptcy Administrator filed the Appointment of Unsecured Creditors Committee (Docket # 268). 3. PBGC was not selected to serve on the Official Committee of Unsecured Creditors. 4. PBGC is a United States government agency that administers the nation s pension insurance program under Title IV of the Employee Retirement Income Security Act of 1974 ( ERISA ), as amended, 29 U.S.C When an underfunded pension plan is terminated, PBGC typically becomes trustee of the plan and, subject to certain statutory limitations, pays the plan participants and their beneficiaries guaranteed benefits from its insurance funds. 5. Walter Energy, Inc. and its co-debtors (collectively, Walter Energy ) are either the sponsor or are under common control with the sponsor of at least two defined benefit pension plans that are covered by PBGC s insurance program ( Plans ). 6. The Plans cover approximately 3,361 participants. 2

3 Case TOM11 Doc 300 Filed 07/31/15 Entered 07/31/15 16:00:35 Desc Main Document Page 3 of 6 7. The Restructuring Support Agreement (Docket # 44) clearly describes the Debtors intention for the Plans to terminate. Section 5(g) describes the following requirement that must be met to avoid triggering a sale under section 363 of the Bankruptcy Code: at 5:00 p.m. prevailing Central Time on October 21, 2015 unless (i) a motion seeking approval of the Bankruptcy Court of an agreement between the Pension Benefit Guaranty Corporation ( the PBGC ) and the Company pursuant to which the Company s qualified single employer defined benefit pension plans will be terminated, which agreement shall be in form and substance acceptable to the Majority Holders, shall have been filed with the Bankruptcy Court, or motions to terminate the Company s qualified single employer defined benefit pension plans have been filed by the Company with the Bankruptcy Court and (ii) motions to terminate the Company s excess and supplemental non-qualified pension plans, in each case in form and substance acceptable to the Majority Holders, have been filed by the Company with the Bankruptcy Court... Restructuring Support Agreement, p. 11 (Docket #44). PBGC S CLAIMS 8. PBGC estimates that its claims against the Debtors for unfunded pension obligations will exceed $105 million. When an underfunded pension plan terminates, PBGC has a statutory claim for the amount of the underfunding against the employer that sponsors the pension plan. PBGC will therefore file claims for the underfunding of the Plans, which are contingent on the Plans termination. In addition, PBGC may have additional claims for the Plans minimum funding contributions and Title IV premiums. The claims extend to all other businesses 3

4 Case TOM11 Doc 300 Filed 07/31/15 Entered 07/31/15 16:00:35 Desc Main Document Page 4 of 6 under common control with that employer. See 29 U.S.C. 1307, 1362; 26 U.S.C. 412, 430. Because of these joint and several liabilities, PBGC has a strong interest in the fiscal integrity of each debtor and in doing its part to ensure a successful reorganization. 9. Based upon available information, PBGC is among the seven largest unsecured creditors. Information contained in the Debtors Amended Consolidated List of Creditors Holding 50 Largest Unsecured Claims (Docket No. 142) indicates that the amount of PBGC s claim exceeds that of at least six of the eleven creditors appointed to the committee. 10. Section 1102(b)(l) of the Bankruptcy Code specifically states that the committee of creditors ordinarily consists of the holders of the seven largest claims against the debtor. While the Bankruptcy Administrator has discretion to vary from that standard, that discretion is not unfettered and is reviewable by this court. See Masters, Mates & Pilots Plans v. Lykes Bros. S.S. Co. (In re Lykes Bros. S.S. Co.), 200 B.R. 933, (M.D. Fla. 1996). ADEQUATE REPRESENTATION OF PBGC S INTERESTS ON THE OFFICIAL COMMITTEE OF UNSECURED CREDITORS U.S.C. 1104(b) states: On request of a party in interest and after notice and a hearing, the court may order the United States trustee to change the membership of a committee appointed under this subsection, if the court determines that the change is necessary to ensure adequate representation of creditors or equity security holders.... 4

5 Case TOM11 Doc 300 Filed 07/31/15 Entered 07/31/15 16:00:35 Desc Main Document Page 5 of Because of the unique nature of PBGC s claims, no other creditor can adequately represent PBGC s interests. PBGC is a government agency with claims that arise from ERISA and the IRC. If the Plans terminate, PBGC is the party that will become the statutory trustee, take control of the assets of each plan, and pay out benefits to the retirees for the rest of their lives. 13. Every loss that PBGC suffers when an underfunded pension plan terminates has a direct impact on the security of the entire pension termination insurance program. PBGC s single-employer program protects approximately 32 million workers and retirees in roughly 23,000 pension plans. PBGC s multiemployer program protects about 10 million workers and retirees in about 1,400 pension plans. PBGC s overall deficit hit a record $61.7 billion in fiscal Congress amended the Bankruptcy Code in 1994 to specifically allow PBGC to be a member of a creditors committee. See 11 U.S.C. 101(41)(B) and 1102(b). 15. Since 1994, PBGC has participated as an active and productive member of creditors committees in dozens of cases nationwide, including many of the largest bankruptcies in U.S. history. 5

6 Case TOM11 Doc 300 Filed 07/31/15 Entered 07/31/15 16:00:35 Desc Main Document Page 6 of 6 WHEREFORE, PBGC respectfully moves the Court to enter an order: (i) scheduling an expedited hearing on the Motion on August 3, 2015 at 10:00 a.m., and (ii) providing such other relief as this Court deems proper. DATED: July 31, 2015 Respectfully submitted, Washington, D.C. /s/ Frank A. Anderson JAMES ARMBRUSTER Deputy Chief Counsel KARTAR KHALSA Assistant Chief Counsel FRANK A. ANDERSON Attorney ADRIAN ZAREBA Attorney Pension Benefit Guaranty Corporation Office of the Chief Counsel 1200 K Street, N.W. Washington, D.C Ph: , ext Fax: s: anderson.frank@pbgc.gov and efile@pbgc.gov 6

7 EXHIBIT 1 Case TOM11 Doc Filed 07/31/15 Entered 07/31/15 16:00:35 Desc Exhibit Exhibit 1 Page 1 of 5

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12 Case TOM11 Doc Filed 07/31/15 Entered 07/31/15 16:00:35 Desc Certificate of Service Page 1 of 1 CERTIFICATE OF SERVICE This is to certify that copies of Pension Benefit Guaranty Corporation s Motion to Add Pension Benefit Guaranty Corporation to the Official Committee of Unsecured Creditors Pursuant to 11 U.S.C. 1102(a)(4) were served via the Court s CM/ECF system on all parties registered to receive such notice for this case, including but not limited to the parties listed below, on July 31, James Blake Bailey Jay R. Bender Patrick Darby Bradley Arant Boult Cummings LLP One Federal Place th Avenue N Birmingham, AL Debtors Counsel J. Thomas Corbett Bankruptcy Administrator th Avenue North Birmingham, AL Bankruptcy Administrator D. Christopher Carson Michael Leo Hall Burr & Forman LLP th 420 North 20 Street, Ste 3400 Birmingham, AL Counsel for Unofficial Committee of Holders of First Lien Claims Ira Dizengoff Kristine Manoukian James Savin Akin Gump Strauss Hauer & Feld LLP One Bryant Park New York, NY Counsel for Unofficial Committee of Holders of First Lien Claims /s/ Frank A. Anderson Frank A. Anderson