Ex-Coal Mogul Gives $1 Million to Miners Whose Paychecks Bounced

(Bloomberg) -- Coal miners who've been protesting in Kentucky for days after their employer went bankrupt and their paychecks bounced got some relief on Tuesday -- in the form of $1 million from a former coal baron.

Ex-Cumberland Resources Ltd. founder Richard Gilliam said he will give $2,000 apiece to 508 workers waiting to be paid by Blackjewel LLC. Gilliam, who started a charitable foundation with his late wife in 2010 after selling Cumberland, said in an emailed statement that he hopes the money “will act as a bridge” for the miners until they're paid.

It's the latest in a string of breaks for the miners, who for more than a week have blocked tracks near Cumberland, Kentucky, to prevent a train load of coal from leaving a Blackjewel mine. On Monday, the company said it would set aside revenue until the workers are paid. Last week, Peabody Energy Corp., the largest U.S. miner, said it had hired 30 of them.

The fate of employees is playing a bigger role in corporate bankruptcies as thousands of workers lose their jobs. The issue has been embraced by some politicians and at least one presidential candidate. Dismissals caused by the collapse of Toys “R” Us Inc. triggered the initial uproar, and saving jobs became a key factor in keeping Sears Holdings Corp. out of liquidation.

In Kentucky, national news outlets have chronicled the plight of the miners and their protest. Senate Majority Leader Mitch McConnell and Vermont Senator Bernie Sanders have both expressed support for the workers.

Proceeds Held

On Monday, an attorney representing Blackjewel said during a hearing in Charleston, West Virginia, that the company will hold some of the proceeds from the sale of coal in Harlan County, Kentucky, until workers there are paid. The move comes after Acting U.S. Secretary of Labor Patrick Pizzella asked the court to halt the movement of coal from the mine until workers get June wages.

Blackjewel violated the Fair Labor Standards Act by not paying miners for work done in June, making the approximately 100 train cars loaded with coal and sitting in Harlan County “hot goods,” attorneys for the labor department wrote in a motion filed Monday morning.

“The portion of the payment that is, in the government's view, attributable to the coal that is subject to the FLSA, we will not spend,” said Stephen Lerner, partner at Squire Patton Boggs US LLP representing Blackjewel. “We will commit not to spend it.”

Legal Questions

Judge Frank W. Volk said during the hearing -- which some miners attended -- that legal questions remain around the transport and sale of the coal. Volk may hear arguments on the issue as early as Tuesday and said the coal won't move until the Labor Department motion is resolved.

Miners last week worked in shifts blocking railroad tracks to stop a train from leaving a Blackjewel-owned mine outside Cumberland, Kentucky. The railroad operator, CSX Corp., eventually left the coal and removed the engines that were set to pull it.

At least 172 employees are owed wages of $664,000 or more for work done in June, according to court papers.

The case is Blackjewel LLC, 3:19-bk-30289, U.S. Bankruptcy Court for the Southern District of West Virginia (Huntington).

To contact the reporters on this story: Jeremy Hill in New York at jhill273@bloomberg.net;Joe Ryan in New York at jryan173@bloomberg.net

To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, ;Lynn Doan at ldoan6@bloomberg.net, Reg Gale

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