Next Week in Bankruptcy

Patriot Coal Corp. hopes to secure a judge’s permission next week for the latest iteration of its chapter 11 exit plan as well as transactions that would hand the company’s West Virginia mines to new owners.

Blackhawk Mining LLC won the bidding to take over most of Patriot’s mines at a bankruptcy auction last month. The sale to Blackhawk forms the backbone of the embattled chapter 11 plan, which faces several dozen of objections from the federal government, key creditors, Patriot’s miners’ union and others. A unit of nonprofit Virginia Conservation Legacy Fund is hoping to take over the remaining mines.

Patriot’s top-ranking lenders, including lenders led by Deutsche Bank and lenders led by Barclays Bank, have also ratcheted up the pressure on the company. The lenders have raised the prospect that Patriot’s bid to hand off its operations will fail in the face of so many objections.

If Patriot doesn’t win confirmation of its chapter 11 plan at a hearing that kicks off Tuesday, the Deutsche Bank-led lenders are seeking a court order that allows them to exercise their remedies, which could mean claiming cash, inventory, accounts receivable or other liquid assets.  The Barclays-led lenders are eyeing Patriot’s scarce cash, and they have suggested that liquidation is a better option than chapter 11.

Patriot sought chapter 11 protection in May, less than two years after emerging from its prior chapter 11 case.

Starting Monday, Caesars Entertainment Operating Co. will square off in a court battle against the bondholders that sought to force it into bankruptcy.

The dispute centers on whether the casino company was unable to pay its debts as they came due before the company voluntarily sought chapter 11 protection.

On Jan. 12, a group of junior bondholders—affiliates of Appaloosa Management LP, Oaktree Capital Management LP and Tennenbaum Capital Partners LLC—filed an involuntary chapter 11 petition against the company in a Delaware court.

But Caesars, a unit of Caesars Entertainment Corp., voluntarily filed for chapter 11 protection in Chicago on Jan. 15. The three days’ difference puts $468 million of Caesars’ cash at stake.

If the Jan. 15 date is upheld, it will preserve senior creditors’ claims to the cash. If the court decides to go with the Jan. 12 date of the involuntary bankruptcy filing, junior bondholders may challenge the senior creditors’ claims to the $468 million.

The bondholders must convince Judge A. Benjamin Goldgar of the U.S. Bankruptcy Court in Chicago that Caesars wasn’t able to pay its debts as they came due as of Jan. 12. Caesars said it was current on most of its debts and was sitting on $790 million in cash when it chose not to make a $225 million payment, which triggered a 30-day grace period.

The company continues to work on securing broad creditor support for a plan to restructure a debt load that tops $18 billion.

Thursday in Manhattan, Great Atlantic & Pacific Tea Co. will continue auctioning about 150 stores as part of its latest chapter 11 case.

A&P, which also owns Food Emporium, Pathmark and other stores, filed for bankruptcy protection in July, its second bankruptcy of the decade, with plans to sell 120 stores, close 25 others and send some 150 additional locations to the auction block. Stores that aren’t bought will likely be closed.

A&P set several October auction dates and has already sold off 30 stores for a combined $169.4 million, according to a source familiar with the sales. Many of the stores up for auction Oct. 8 have already secured initial bids.

A Pathmark store on West 145th Street in Manhattan and a Waldbaums store in Rocky Point, N.Y., together have attracted an initial offer of $19.4 million subject to higher bids at Thursday’s auction, court papers show.

The company is planning to sell 12 other stores to Wakefern Food Corp. for a combined $40 million, also subject to higher bids Thursday.

Last month, a judge approved the sale of 95 A&P stores to rivals Albertsons Cos. and Ahold’s Stop & Shop Supermarket Co. for a total of $369 million.

At its peak, A&P boasted some 4,200 stores, but it has faced declining sales for decades, leading to multiple management teams, varying strategies and the 2010 bankruptcy filing—none of which stopped its downward spiral.

- Jacqueline Palank and Peg Brickley contributed to this article.

Write to Tom Corrigan at [email protected]

This post has been updated to reflect Patriot’s adjournment of its confirmation hearing to Tuesday from Monday.