In re Lady H Coal Co., Inc.
United States Bankruptcy Court for the Southern District of West Virginia
193 B.R. 233 (1996)
Lady H Coal Co. (Lady H) (debtor), a unionized coal-mining company in Chapter 11, hired a broker to sell its operations without notifying the union, and neither Lady H nor the broker made real efforts to find a buyer willing to assume the collective bargaining agreement (CBA); after finding a buyer, A.T. Massey Company (Massey), Lady H entered a letter of intent not requiring Massey to assume the CBA, only then approaching the union to modify it, which the union rejected. Lady H filed a reorganization plan based on the Massey sale and asked the court to approve rejecting the CBA.
Whether a debtor may reject its collective bargaining agreement in a Chapter 11 reorganization when it excluded the union from the sale process, negotiated with the union only after committing to a buyer who wouldn't assume the agreement, and the equities don't clearly favor rejection.