In the bankruptcy court filing, Peabody says if it were forced to secure the full amount, it would be unable to continue operating its mines.
Instead, Peabody and state regulators in Wyoming, Indiana and New Mexico have reached agreements that give the states priority claims on a pool of $200 million—less than a fifth of the company’s total obligations—in the event Peabody cannot reemerge from bankruptcy and instead liquidates.
Wyoming regulators offered Arch Coal and Alpha Natural Resources similar deals in their bankruptcy proceedings over the objections of environmental groups. The federal government recently chastised Wyoming over the deal with Alpha, but the state maintains it acted in the public interest.
A bankruptcy judge needs to approve the agreements with Peabody before they go into effect.