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How Did the Market React to Peabody Energy’s Chapter 11 Filing?

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Apr. 15 2016, Published 2:28 p.m. ET

Market reaction

Peabody Energy filed for Chapter 11 bankruptcy protection on April 13, 2016. The company’s bankruptcy was widely anticipated. Interestingly, the bankruptcy protection doesn’t include Peabody Energy’s Australian operations. According to company filings, the filing subsidiaries include the majority of Peabody’s US subsidiaries and one international subsidiary in Gibraltar.

As the bankruptcy news was expected, it didn’t have a significant impact on the stock price of Peabody’s peers. The stock price of major coal (KOL) mining companies such as Cloud Peak Energy (CLD), CONSOL Energy (CNX), Alliance Resource Partners (ARLP), and Westmoreland Coal (WLB) closed nearly flat. On the other hand, Arch Coal (ACIIQ) was up by nearly 10% during the intraday trading session.

The VanEck Vectors Coal ETF (KOL), which tracks the broader base coal mining industry, closed nearly 3% above its previous closing price on positive market cues.

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Peabody Energy stock suspended for trading

After the bankruptcy announcement, Peabody Energy’s stock was suspended from trading on the New York Stock Exchange. Currently, Peabody Energy’s common stock doesn’t trade on any of the major stock exchanges in the United States. However, it’s trading as a pink sheet, or penny stock, on OTC (over-the-counter) markets with the BTUUQ ticker. The stock value tumbled by nearly 60% to $0.83 from its previous closing price of $2.06 after the bankruptcy news on April 13, 2016.

Series overview

In this series, we’ll look at the following questions:

  • What are the major factors that led to Peabody Energy’s (BTUUQ) bankruptcy?
  • What does bankruptcy mean for Peabody’s investors?
  • What’s next for Peabody Energy?
  • How will Peabody’s bankruptcy affect its peers?
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