As the mining industry continues to feel the impacts of low commodity prices, bankruptcy and successorship issues have become increasingly relevant. Historically, bankruptcy has provided for the purchase of an insolvent entity’s assets without the third-party purchaser incurring the undue risks of taking on the debtor’s liabilities. Indeed, this very mechanism has allowed for new operators to continue mining operations that may otherwise fold completely, with potentially devastating effects on the economies of local mining communities. However, recent case law coming out of the Federal Mine Safety and Health Review Commission—the independent agency tasked with adjudicating claims under the Mine Act—demonstrates that at least some administrative law judges are in disagreement with the typical bankruptcy process and may attempt to hold companies who purchase mining assets out of the bankruptcy process liable (in some form or another) as successors in interest. This potentially includes liability for events that occurred well before bankruptcy and which were disposed of or settled during bankruptcy proceedings and in the face of bankruptcy court orders to the contrary.
Squire Patton Boggs attorney Peter Gould recently spoke on this new topic at the Energy and Mineral Law Foundation’s (EMLF) annual mining conference in Las Vegas, Nevada, in conjunction with MINExpo 2016. The topic sparked great interest from the mining community. Although legal questions surrounding this topic are far from settled, this issue warrants close attention as the law continues to develop. Slides from the EMLF presentation are attached here: EMLF Successors, Bankruptcy, and MSHA.
