Jail time still possibly on table if American Resources Corporation fails to comply

A U.S. Bankruptcy judge ordered last week that a coal company must pay nearly $1.1 million by June 1 or face financial sanctions, then possibly jail time for a company officer, if the company still fails to comply.

In a hearing on May 14, U.S. Bankruptcy Judge Gregory R. Schaaf told an attorney for American Resources Corporation that the company’s continued lack of compliance with the court’s orders regarding its operations had led him to the conclusion that jail time could possibly be the only way to force the company to comply with his orders.

The discussion occurred May 14 during a telephone conference in the bankruptcy case filed last year by Cambrian Holding Company, as a part of which, assets of Cambrian were purchased by American Resources Corporation.

ARC, through its subsidiary Perry County Resources, was one of three companies which purchased the assets of bankrupt coal company Cambrian Holding Company.

However, in filings and hearings, legal representatives of Cambrian and the creditor’s committee in the case allege that ARC has failed to hold up to its end of the deal and failed to pay for obligations. This, it was revealed, remained true even after ARC was the recipient of a Payroll Protection Program grant of $2.7 million.

Schaaf threatened during the hearing that jail time was potentially an option in the case due to ARC’s continued failure to comply with his orders.

“I’m going to sanction your client ... your client is going to be severely sanctioned and I am not against jail time because, I understand the pandemic now, but we’re not talking about payments that should have been made today,” Schaaf said during the hearing to ARC attorney Billy Shelton. “We’re talking about payments that should have been made in October or November of 2019, so those arguments are falling on deaf ears. I wish you were here to see me because I probably am kind of red in the face.”

In Schaaf’s ruling issued May 22, he continued to mention the possibility of jail time, while ordering ARC to pay $1.06 million to satisfy outstanding obligations. If that payment is not made, the order said, a monetary sanction of $2,500 per day will be levied against American Resources Corporation and a second monetary sanction of $2,500 per day will be levied against Perry County Resources.

However, the potential sanctions won’t stop there, the order shows.

“Further, if any payment is not made as and when due, the debtors, ARC and PCR are ordered to appear at a hearing to present evidence to justify additional sanctions, including incarceration of a responsible officer, suspension of the sanctions, or recourse to other or more limited sanctions,” Schaaf wrote.

In the order, the judge wrote that the impact of ARC and PCR’s violations of the courts orders is substantial and “egregious when the failure to make payment involves employees that very often live paycheck to paycheck.”

Schaaf also wrote that the violations have taken up a substantial amount of time of the court and the other individual attorneys involved.

Payment in the case had not been made as of presstime May 26.

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