Lender Says Murray Energy Violated Deal in ‘Brazen’ Loan Default

(Bloomberg) -- Murray Energy Corp. allegedly violated a bankruptcy financing agreement after manipulating financial information, according to court papers filed by one of its lenders.

GACP Finance Co., owed some $90 million under a loan tied up in Murray Energy’s bankruptcy financing package, delivered a notice of default to the coal miner on Wednesday, court papers show. The lender alleges Murray improperly included non-coal receivables in a financial report in an attempt to remain compliant with a credit agreement.

The lender is seeking a court order barring anyone from interfering with its ability to freeze the Murray Energy bank accounts that serve as collateral for its loan. GACP called Murray’s actions a “brazen attempt” to “improperly manipulate” the weekly financial report, adding the current assets underpinning its loan “are rapidly disappearing at an alarming rate.”

Murray Energy, America’s largest privately-held coal producer, filed for bankruptcy in October following a years-long decline in demand for coal. Rival coal producer Consol Energy Inc. is urging a bankruptcy judge to convert Murray’s case to Chapter 7, a liquidation. Murray itself previously said it may have to liquidate unless it could cut health-care payments to retirees.

A representative for Murray didn’t immediately respond to requests for comment. A GACP representative declined to comment beyond the court filings.

The case is Murray Energy Holdings Co., 19-bk-56885, U.S. Bankruptcy Court Southern District of Ohio (Columbus)

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