January 18, 2016 Comments (0) Blog

Securities Investigation Into Arch Coal, Inc.’s Bankruptcy

(Last Updated On: January 18, 2016)

The White Law Group is currently investigating losses suffered by investors arising from the purchase of Arch Coal, Inc. (“Arch Coal”) at the recommendation of their brokerage firm or financial advisor.  If you suffered losses investing in Arch Coal, the securities attorneys of The White Law Group may be able to help you recover your losses in a FINRA arbitration claim against the brokerage firm that recommended the investment.

Arch Coal is a Missouri-based coal company with over 4,600 employees.  It is the second-largest U.S. coal mining company with mining complexes across every major U.S. coal supply basin, represents over 13% of America’s coal supply, and has reserves estimated at more than 5 billion tons.  Arch Coal was formed in July of 1997 through the merger of Ashland Coal, Inc., a publicly traded company, and Arch Mineral Corporation, a privately held company.  Its shares traded on the New York Stock Exchange (“NYSE”) under the ticker symbol ACI until the NYSE suspended trading of its common stock and initiated proceedings to delist the stock on January 11, 2016.  It currently trades on the Over-The-Counter Bulletin Board under the ticker symbol ACIIQ.

On January 11, 2016, Arch Coal filed for chapter 11 bankruptcy protection.  Its filing follows those of some of its peers, including, Walter Entergy, Alpha Natural Resources, and Patriot Coal.  See In re Arch Coal Inc., 16-40120, U.S. Bankruptcy Court, Eastern District of Missouri.

U.S. Bankruptcy Judge Charles Rendlen has approved, on an interim basis, $275 million in debtor-in-possession (“DIP”) financing and the use of $600 million in cash.  The DIP loan includes a $75 million carve-out for environmental cleanup.

Under a proposed debt-for-equity swap, senior lenders would receive control of most of the company, while junior lenders would be offered a small amount of equity or the value of Arch Coal’s assets that are not pledged as collateral for senior loans.  Investors in Arch Coal’s common stock are now holding shares that closed at $0.15 on January 14, 2016, down from a 52-week high of $14.30—a 98.95% loss.

It is for this reason that The White Law Group is investigating the liability that brokerage firms and financial advisors may have for recommending high risk energy investments, like Arch Coal, to their clients.

Brokerage firms that recommend energy investments are required to perform adequate due diligence on the investments to ensure a reasonable likelihood of success, and to evaluate whether the investments are suitable in light of their client’s age, net worth, investment experience, risk tolerance, and investment objectives. Firms that fail to perform adequate due diligence, or that make unsuitable recommendations, can be held responsible for losses in a FINRA arbitration claim.

If you suffered losses investing Arch Coal or another energy investment and would like to discuss your litigation options, please call The White Law Group at (312) 238-9650 for a free consultation.

The White Law Group is a national securities arbitration, securities fraud, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.  The firm represents investors throughout the country in FINRA arbitration claims against their brokerage firm.

For more information on The White Law Group, visit www.whitesecuritieslaw.com.