Next Week in Bankruptcy

On Thursday in Richmond, Va., a bankruptcy judge will hold a preliminary hearing on Alpha Natural Resources Inc.’s multibillion-dollar debt-repayment plan.

Alpha, which sought chapter 11 protection in August, will ask Judge Kevin R. Huennekens to approve a plain-language version of the plan intended to help creditors decide whether to vote for or against the proposal. The plan outlines how much those creditors can expect to recover and is funded by the sale of some of the company’s coal mines and other assets.

Alpha’s natural-gas business is now slated to be sold off to Vantage Energy, which beat out Rice Energy to win the bidding at an auction Monday. Bankruptcy filings show Vantage bid $339.5 million for the unit, which explores for gas in the Marcellus Shale, driving up Rice’s initial offer of $200 million to $335 million but ultimately prevailing.

And lenders are on track to take over its core coal mines, offering to forgive $325 million in debt in exchange for mines in Wyoming, West Virginia, Virginia and other assets. Alpha says its board decided to stick with the lenders’ bid after determining that the other possibilities on the table “provided no additional value,” “were not economically viable” and/or “contained speculative financing or other unacceptable contingencies.” A proposed settlement would see Alpha’s bondholders and general unsecured creditors to share in ownership of those assets.

Last week, the court authorized Alpha to end its labor pacts with the United Mine Workers of America, which cover roughly 600 active union workers as well as about 2,600 retired union workers, as part of a broad cost-cutting with regard to assets that go unsold.

In Wilmington, Del., Wednesday, paper-maker Verso Corp. will ask a court to approve at least $575 million in bankruptcy-exit financing.

If approved by Judge Kevin Gross, banks could begin syndicating the debt, which according to court papers could rise to $650 million. The new financing would fund Verso’s emergence from bankruptcy and to pay off existing financing that’s getting it through chapter 11.

But Verso has also asked the judge to keep secret fees for Wells Fargo and Barclays for arranging the loans, closing the loans and serving as loan agents, among other things. Verso says it will share the amount of the fees with the court and key creditors, but it wants to shield them from public view.

Verso has already won court approval to poll creditors on its bankruptcy-exit plan, which is designed to get its balance sheet in line with the lower demand for paper in an era of digital information delivery.

Many creditors have already lined up to support the restructuring of the country’s largest maker of coated paper stock even though it means a recovery of pennies on the dollar for more than $700 million worth of debt. Verso filed for bankruptcy in January with total debts of more than $2.4 billion.

Also Thursday, Pacific Sunwear of California Inc. will ask a judge for approval of requests it says are key to its bankruptcy-court-supervised reorganization.

The teen retailer is slated to return to the U.S. Bankruptcy Court in Wilmington, Del., to seek Judge Laurie Selber Silverstein’s permission to send a version of its reorganization plan out to creditors and to begin drawing down the rest of $100 million in bankruptcy financing.

Pacific Sunwear has already won approval to use up to $62.5 million of the loan, which is provided by a group of existing lenders led by Wells Fargo. The retailer says it needs the rest to repay existing debt, professional fees and to keep stores open through the bankruptcy process.

And before creditors vote on the company’s restructuring proposal, the judge must sign off on a plain-language outline of the plan that typically accompanies bankruptcy ballots. Unsecured creditors and certain term-loan lenders are allowed to cast votes, court papers show. Pacific Sunwear, which has 593 stores across the U.S. and Puerto Rico, has roughly $60 million in unsecured debt, including claims for unpaid rent and leases.

Pacific Sunwear, which sought chapter 11 protection in April, has already won court permission to move forward with plans to test its restructuring proposal at auction. The retailer has a June 15 deadline to receive bids and, if needed, will hold an auction on June 22.

-Jacqueline Palank and Lillian Rizzo contributed to this article.

Write to Tom Corrigan at [email protected]. Follow him on Twitter at @TomCorriganWSJ