By Editors of Power Engineering

Armstrong Energy, a coal-mining company operating out of the Illinois Basin, has filed for chapter 11 bankruptcy protection.

In a press release, the company said the corporate reorganization was necessary to transfer all of its assets to a new entity jointly owned by Knight Hawk Holdings and the company’s stakeholders.

Armstrong expects mining and shipments will continue during the process.

The Wall Street Journal reported Armstrong’s shares are almost completely owned by investment funds managed by Yorktown Partners LLC, and the noteholders will assume complete ownership after forgiving $90 million in debt. Knight Hawk Holdings will take over the company’s operations and will receive an undisclosed portion of equity later.

Court documents indicated the company has experienced reduced demand for coal and lower coal prices due to high supplies and low prices of natural gas.

The 10-year-old company controls over 565 million tons of coal reserves and operates five mines, and sells coal to six utilities, including Louisville Gas & Electric and the Tennessee Valley Authority.