Jno. McCall Coal Co., a coal mining and marketing company that was Baltimore's fourth-largest privately held corporation, has filed for reorganization under Chapter 11 of the federal bankruptcy laws.
The company filed a petition for reorganization Friday after several of its creditors asked that its assets be liquidated involuntarily under Chapter 7 of the bankruptcy laws, M. Philip Lehr, McCall's president and chief executive officer, said yesterday.
Jno. McCall Coal Export Corp., a wholly owned subsidiary that has been one of the biggest shippers through the port of Baltimore, filed for reorganization at the same time its parent company did, Mr. Lehr said. The export subsidiary was not a target of the petition for involuntary liquidation, he added.
A company may be forced into bankruptcy if it has 12 creditors who hold unsecured debts of $5,000 or more and three of them file a petition under Chapter 7. When that occurs, the company has the right to convert the filing to a Chapter 11 proceeding.
Chapter 11 allows a company to continue operating while it consolidates and restructures its debts. A company is not required to liquidate, or sell off, its assets under Chapter 11, but Mr. Lehr said McCall is considering that and other options.
"A final determination has not been made, but, yes, it is possible that we may liquidate," he said.
Founded in 1928, McCall reported sales in 1989 of more than $200 million, according to documents filed in U.S. District Court in Baltimore.
In addition to the the coal-export subsidiary, McCall owns McCall Air Inc., which charters airplanes, and 80 percent of Masteller Coal Co., which operates surface and deep mines in West Virginia. With the coal-export subsidiary it owns 57.5 percent of Elkins Valley Coal Co. Inc.
Over the past several years, the mining operations have suffered "many millions of dollars in losses," Mr. Lehr said. As a result, McCall has struggled under an increasing debt load in recent months, he said.
"... The board of directors made management changes in May in an effort to change the fortunes of the company, but the specifics beyond that I would prefer not to comment on," Mr. Lehr said.
The company reported assets of $39.8 million and debts of $29.5 million in the court documents.
The work force at McCall's Baltimore headquarters has been cut to 30 people, about half of its former strength, Mr. Lehr said. The company's mining operations still have about 200 employees nationwide, but its sales offices in Bluefield, W.Va.; Richmond, Va.; Cincinnati, Detroit and Melbourne, Australia, were all closed within the last three months, he said.
According to the court documents, McCall's major unsecured creditors include Mapco Coal Inc. of Tulsa, to which it owes $4.6 million; Norfolk Southern Corp. of Norfolk, Va., $2.3 million; CSX Transportation of Baltimore, $1.8 million; Consolidation Coal Co. of Pittsburgh, $1.1 million; Shell Coal Marketing of Richmond, $1.1 million; and Cannelton Sales Co. of Charleston, W.Va., $1 million.
No petitions were filed for McCall Air, Masteller or Elkins Valley. "Each of these subsidiaries has an independent set of creditors, and we believe these subsidiaries have enough assets to satisfy those creditors" outside of a bankruptcy proceeding, Mr. Lehr said.