Judge will allow Komatsu to proceed with foreclosure process on two shovels

June 9, 2020

A federal bankruptcy court has ruled that Komatsu Mining Corp. can begin foreclosure procedures for two shovels currently operating at Eagle Specialty Materials’ Eagle Butte and Bell Ayr mines in the Powder River Basin.

Judge Benjamin A. Kahn of the U.S. Bankruptcy Court for the Southern District of West Virginia denied requests from both Eagle Specialty Materials and Blackjewel LLC to hold an evidentiary hearing on Komatsu’s claims that it’s owed millions of dollars on a broken maintenance contract for the shovels — called Shovel 12 and Shovel 13 in court documents.

Eagle Specialty Minerals purchased the mines for $40.2 million following the bankruptcy of previous mine owner Blackjewel in 2019. The shovels were not included in the sale but Komatsu contends that the mines' current and previous owners owe millions of dollars on a maintenance contract for the shovels, the Gillette News Record reported.

Eagle Specialty Materials and Blackjewel don't dispute that they owe on the shovels. The question is how much, Eagle Specialty Materials attorney Steven L. Thomas said in court.

The two mines closed when Blackjewel filed for bankruptcy last July, putting more than 500 miners out of work. The bankruptcy, which also put miners out of work in Appalachia, was among the more disruptive amid several in the U.S. coal industry due to declining use of the fossil fuel. 

Eagle Specialty Materials and Komatsu planned to negotiate a resolution to the shovel dispute after the mines' sale, Blackjewel attorney Stephen Lerner said.

They haven't reached agreement. Eagle Specialty Materials and Blackjewel shouldn’t be expected to pay a bill without seeing justification for how much they owe, Thomas said.

“They can’t just file something and say we’re owed millions of dollars and everybody just says, ‘Well, you must be right because you’re Komatsu,’” Thomas said.

Blackjewel still holds title to the shovels even as Komatsu has a valid lien and Eagle Specialty Materials continues to use the equipment, said Parks, the Komatsu attorney.
 

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