Why the hell would anyone do this?

Assume, for a moment, that this side of the story is actually telling the truth:

There are no longer any unionized mines in Kentucky, but Harlan’s miners are currently continuing the region’s legacy of labor struggles against wealthy and powerful coal corporations: they are blocking the coal trains from leaving a mine that laid them off.

A collection of tents next to some rail tracks may not look like much compared to that rich legacy of labor struggle. A small group of families have occupied the site since 29 July, sitting on camp chairs, occasionally hosting live music and attracting sympathetic supporters from all over the US.

The small protest has endured for more than six weeks now, garnering nationwide attention – including a video of support from the Democratic presidential candidate Bernie Sanders – and preventing trains carrying more than $1m worth of coal from being moved out of Harlan county until workers are compensated for the unpaid wages they’re owed since mining firm Blackjewel filed for bankruptcy.

The specific being that near 2,000 miners are owed up to $6,000 each. Sure, that’s $12 million, that’s real money.

Blackjewel referred comment to a page with bankruptcy hearing updates.

The first phase of the project is expected to cost $30m and open in mid to late 2020, while Blackjewel is liable for at least $500m in debt owed to creditors, unpaid taxes and unpaid wages, nearly $10m in payments owed to federal black lung benefits fund, and mine clean up costs that will be passed on to taxpayers if the mine properties aren’t resold.

It’s also not all that much in context.

OK, so this is assumptions but still. A bankruptcy judge is going to look pretty kindly on a carve out for paychecks already issued. So too should creditors – paying will almost certainly cost less than the legal arguing about it let alone whatever the costs of the protest.

But what sort of twat tries to bounce those paychecks already issued? I think, in English law, that would be breaching the going concern bit and would be a criminal (? maybe civil?) offence anyway.

Yes, I know, sure, capitalism red in tooth and claw. But why set yourself up to be an ogre in this manner?

17 comments on “Why the hell would anyone do this?

  1. A cheque issued is a debt. You need bankruptcy court permission to pay debts incurred before filing. It isn’t clear what the plan proposes in terms of payment or not, but not unusual for creditors to have to wait until the company exits bankruptcy to get paid.

    There is sometimes a carve out where the judge will allow payment of pre-filing debts during the case in order to get a supplier to continue supplying and thus the company operating – but that would only come into play for current staff not ex-staff.

    So a bit rough, but you need to see how the case finishes and how they are treated to judge this. Also not sure the judge will be too happy about people blockading the company as a way to put pressure on his courtroom.

  2. Been there.
    Twice in 1984 (for 2 different employers!) I was issued a bouncing paycheck which was never honoured followed by company bankruptcy and termination without notice or compensation.
    Twas a recession on.
    One interpretation is indeed that the Finance Director writing the paychecks is acting criminally.
    Another is that the company’s bank reneged on the agreed overdraft when they realised the ‘imminent funding’ wasn’t going to happen.
    Either way, no point wasting life on whinging about it. There is no pot of money left. On to something else.
    Yet these people have already wasted 6 weeks of potential job-seeking while they complain about bankruptcy of their employer. Who do they expect to pay them? The tooth fairy?

    Perhaps the Greens should be rejoicing at this success…..if the ex-miners realise this…could be “interesting times”.

  3. Compared to the evil of socialism its a joke. Try sitting in your fucking camp chairs outside a Gulag.

    However–if dirty tricks are afoot then a personal visit to the Company pork concerned would be a lot more use than lawdogging to give leftist shite publicity.

  4. “There is no pot of money left.”

    Well that’s exactly the point. Either the company was insolvent to the tune of $500m in which case a lot of directors need jailing, or there is a pot of money currently under administration.

    The problem is that that pot of money isn’t $500m and so the various creditors are arguing as to who gets how much. The “strikers” are attempting to carve out their chunk of it. I’ll also wager that Kentucky isn’t awash with jobs for redundant miners (in the short term), what with extant mines going out of business and all.

  5. “Yet these people have already wasted 6 weeks of potential job-seeking while they complain about bankruptcy of their employer. Who do they expect to pay them? The tooth fairy?”

    They’re probably making more money from fundraising on their protest than they did as miners.

  6. A quick unprofessional look at rankings in bankruptcy shows large differences in approach.
    In France, employees outrank even secured creditors.
    In UK employees are preferred (up to a certain level?)
    In others secured creditors even outrank the admin fees in bankruptcy.
    In US (it appears) employees are unsecured creditors.

    Perhaps they are striking to demand a change in the law. And being subbed for it by some who would like to see such a change.

  7. ‘But what sort of twat tries to bounce those paychecks already issued?’

    Reading the full article, it looks like cheques were paid in, the amount credited to the payee’s account but then the credit reversed. This happens if a cheque is paid in but does not clear when presented to the paying bank by the receiving bank.

    In this case non-clearance could have been because there were insufficient funds in the company account, or the receiver had frozen the company’s accounts – the latter being the most likely.

    Cleared funds in a payee’s account cannot just be taken out again without legal due process.

  8. Failing companies can become increasingly disorganized as they slip down into the abyss. Executive management or owners may try to get as much cash out for themselves or friends as they can (which is subject to being clawed back by the court). Staff, particularly accounting and admin staff, may have been laid off. Bank accounts don’t get reconciled so they don’t really know how much cash they’ve got. Sometimes “net checks” may be cut for payroll and the payroll taxes not remitted to the taxing authorities.

    Unpaid wages back for 6 months or thereabouts are a priority claim even ahead of secured creditors. But it can take awhile for the process to work.

  9. Forget it, Jake. It’s The Guardian…

    First of all, I do believe employees are considered unsecured creditors. Could be wrong, but don’t think so.

    Second, note that there are nowhere near 2,000 protesters (the number of unpaid employees) involved in the heroic struggle The Guardian is describing. That’s because (1) they understand the bankruptcy process, (2) they understand protesting is useless given that process, and (3) they are trying to find jobs.

    Finally, this is a story that has garnered very little press in the USA. The rabidly anti-Trump media has ignored it… Primarily because bankrupting coal companies and throwing miners out of work were the stated objectives of both Barack Obama and Hillary Clinton. Should anyone try to blame Trump, he would happily play the clip of Clinton saying, with an smirk, that her environmental policies “will put a lot of miners out of work”.

    Leave it to The Guardian to demand policies that bankrupt coal companies and destroy mining jobs, then run a sympathy puff piece on how THE CAPITALISTS are screwing the proletariat. Morons.

  10. Failing companies can become increasingly disorganized as they slip down into the abyss. Executive management or owners may try to get as much cash out for themselves or friends as they can (which is subject to being clawed back by the court). Staff, particularly accounting and admin staff, may have been laid off. Bank accounts don’t get reconciled so they don’t really know how much cash they’ve got. Sometimes “net checks” may be cut for payroll and the payroll taxes not remitted to the taxing authorities.

    All of this is true. There is one element lacking… That being the role simple denial plays in the slide into bankruptcy. I once sat down with a small business owner and explained to him in detail why his company would be in bankruptcy within a year if he didn’t change his ways. I was rewarded with much yelled abuse and was fired on the spot. He wasn’t a bad man, it was simply a matter of being overwhelmed by cognitive dissonance that resolved itself in denial. He filed for bankruptcy a year later.

    We want to assume that owners and management react to the information available to them in a logical manner. Often, that doesn’t happen. And it tends to be more often when the information points to a catastrophe no one knows how to prevent.

  11. Dennis, yup. Exactly right. I should have included that. “This can’t be happening to me so it isn’t happening to me.” And the situation worsens.

  12. ‘until workers are compensated for the unpaid wages they’re owed since mining firm Blackjewel filed for bankruptcy.’

    ‘Harlan’s miners are currently continuing the region’s legacy of labor struggles against wealthy and powerful coal corporations’

    So ‘wealthy’ Blackjewel has filed for bankruptcy?

    The stupid – it burns!

  13. In the UK a supplier can stop a cheque (check) or other forms of payment, but they are then subject to the check rule.

    Just paid your supplier for goods and/or services but now want to stop the cheque because you have suddenly realised it is not conducive to your cash flow or perhaps you have found a defect? Think again!

    It is very dangerous to stop a cheque unless the payer is absolutely sure it can prove the supplier or contractor is at fault and is not entitled to any of the amount shown on the cheque. This is because, technically, there is no defence to stopping a cheque. Once the cheque has been signed and handed over, then a legally binding contract has been entered into and the payer has to honour the debt.

    When a cheque is issued as consideration for goods and/or services, a separate contract is entered into between the seller and purchaser to the contract that was previously entered into for the supply of the goods and/or services. Hence when a cheque is returned unpaid, the seller may elect to bring a claim either under the supply contract or, the separate contract entered into when the cheque was issued to the seller. If the seller elects to bring a claim under the cheque contract, this is referred to as the Cheque Rule.

    The foundation for this cause of action is in the basis that cheques are a bill of exchange, being construed as the equivalent to instalments of cash, albeit deferred, and as such are unconditional promises to pay based upon the presentation of the cheque. If the cheque is stopped or is returned unpaid for whatever reason, a good cause of action arises.

    The Cheque Rule applies to payments made by:

    Direct debit
    Cheques and bills of exchange
    Letter of credit
    Performance bonds.
    There are exceptions to the rule, for instance where the customer has received absolutely nothing in exchange for their payment, or where the contract was illegal, or the cheque was obtained in a fraudulent way.

    However, it is a brave payer that issues and then stops a cheque, especially with the prospect of a Part 24 judgement application looming over ones head!

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