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In re Arch Coal, Inc.

United States District Court, E.D. Missouri, Eastern Division

October 20, 2017

IN RE ARCH COAL, INC. et al., Reorganized Debtors,
ARCH COAL, INC. Appellee. WAYNE ENGLISH Appellant,



         This matter is before the Court on the appeal of Wayne English. This matter is fully briefed and ready for disposition.


         English held $140, 000 the principal amount of 9.875% Senior Notes Due 2019 issued by Arch Coal, and he filed two proofs of claim in Arch Coal's Chapter 11 bankruptcy case (Claim #1066 and Claim #1068). The Claims present similar issues and do not include any reference to fraud or misrepresentation.

         The Bankruptcy Court entered an order that authorized the indenture trustees for Arch Coal's debt instruments to file master proofs of claim against Arch Coal and its debtor subsidiaries. UMB Bank, National Association, filed a master proof of claim in the amount of $375 million in principal, plus more than $21 million in accrued and unpaid interest, on behalf of itself and the noteholders. (Claim #1189).

         Arch Coal and its debt subsidiaries proposed a plan of reorganization (the "Plan") that provided for noteholders to receive a combination of cash and securities on account of their claims. (Appendix A to DE 1334 at 28-29, 30-31).[1] This distribution was to be made to noteholders via the Indenture Trustee (id. at 37-38). The Bankruptcy Court entered an order confirming the Plan on September 15, 2016, and the Plan became effective on October 5, 2016. (DE 1334, 1356). English received the distribution provided to his class of noteholders under the Plan. (Br. 9, 11).

         The Plan and the confirmation order also included a discharge of Arch Coal's debts, consistent with Section 1141(d)(1) of the Bankruptcy Code. (Appendix A to DE1334 at 60-63; DE 1334 at 51-52).

         After the Plan was confirmed, Arch Coal objected to English's claims, and many others, as duplicative of the master claim filed by the Indenture Trustee (DE 1354). English provided a response that was rejected by the clerk of the Bankruptcy Court because it was not signed. (DE 1418). English later submitted his response with a signature (id.) and requested that the Bankruptcy consider his response timely. (DE 1446). The Bankruptcy Court sustained the objection and disallowed English's claim as duplicative. (DE 1495).


         This Court reviews the Bankruptcy Court's findings of fact for clear error and its conclusions of law de novo. In re Reynolds, 425 F.3d 526, 531 (8th Cir. 2005). Reversal is appropriate if the Bankruptcy Court misunderstood or misapplied the law. In re Usery, 123 F.3d 1089, 1093 (8th Cir. 1997) (citing Nangle v. Lauer (In re Lauer), 98 F.3d 378, 383-85 (8th Cir. 1996); Hold-Trade Int'l, Inc. v. Adams Bank & Trust (In re Quality Processing, Inc.), 9 F.3d 1360, 1364-66 (8th Cir. 1993).


         A. English Received his Full Recovery Through the Indenture Trustee

         English argues that the Bankruptcy Court erred in disallowing his claim for prepetition interest in the amount of $14, 847.00 in violation of 11 U.S.C. §502. (ECF No. 11 at 10-12). English claims that the Bankruptcy Court did not provide any exceptions to English's prepetition interest claim and, therefore, his claim for prepetition interest should be allowed.

         English, however, does not dispute that he received the distribution for which he was entitled as a holder of Arch Coal notes from the Indenture Trustee. (Br. 9, 11). The Court holds that English's claim that he should be permitted to retain that distribution and recover more is inconsistent with the Bankruptcy Code. The Bankruptcy Code provides that "[notwithstanding any otherwise applicable nonbankruptcy law, a plan shall provide the same treatment for each claim or interest of a particular class, unless the holder of a particular claim or interest agrees to a less favorable treatment of such particular claim or interest." 11 U.S.C. §1123(a)(4). English's request for additional "prepetition interest" is "entirely at odds with fundamental bankruptcy policy favoring equality of distribution among similarly situated creditors. In bankruptcy, multiple recoveries for an identical injury are generally disallowed." In re Finley, Kumble, Wagner, Heine, Underberg, Manley, Myerson & Casey, 160 B.R. 882, 894 (Bankr. S.D.N.Y. 1993). English fails to dispute that he would receive a double recovery. Instead, he asserts that he and other noteholders did not receive any distribution for interest. (Br. 11). Based upon the record, English's assertion is inaccurate. The Indenture Trustee's proof of claim included more than $21 million in accrued and unpaid interest. (Claim #1189; DE 1354 ΒΆ45). The Plan failed to disallow claims for accrued, pre-bankruptcy interest owed to noteholders. Neither Arch Coal nor any other party in interest objected to ...

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