A bankrupt coal company wants to sell its Wyoming assets and has named a bidder: the company from which the mines were acquired in the first place.

In a motion filed early Thursday, attorneys for Blackjewel LLC asked a judge to approve Contura Energy, Inc. as a 'stalking horse bidder' as the company moves to sell off its assets and avoid a costly Chapter 7 liquidation. Having failed to secure debtor-in-possession financing to continue as a going concern, Blackjewel now looks to sell its holdings for as much money as possible and repay its creditors.

Designation of a stalking horse bidder would establish a minimum bid for all of Blackjewel's substantial assets in Wyoming as well as the Pax Mine in West Virginia. As of Thursday, Blackjewel says 10 parties have signed non-disclosure agreements and are actively considering the purchase of some of Blackjewel's assets.

Should the stalking horse sale to Contura ultimately go through -- that is, if Contura is not outbid -- the mines would be restored to operating status and up to 700 Wyoming residents could go back to work for "an estimated minimum of six to twelve years," the motion states.

Contura would receive the assets free and clear of all liens.

Under a proposed timeline, Blackjewel would accept bids until 5 p.m. EDT Wednesday, July 31. An auction, if necessary, would be held the following day. The proposed closing date would be Aug. 5.

"[Blackjewel]'s incremental debtor-in-possession financing liquidity has now been exhausted, and absent approval by the court of the sale process herein and Contura's stalking horse bid, [Blackjewel] will ultimately be forced into Chapter 7 [liquidation]," the motion states.

The stalking horse agreement between Blackjewel and Contura would see Contura assume hundreds of millions of dollars in liabilities, including payroll-related payments for employees returning to work in Wyoming. Contura would pay Blackjewel $20.6 million, which Blackjewel would use to maintain its current holdings in an effort to prevent them from deteriorating.

"Critically, Contura has agreed to fund a cash deposit toward the purchase price under the Stalking Horse Sale immediately... and to allow [Blackjewel] to use this deposit to pay anticipated expenses through the conclusion of an expedited, but efficient sale process for substantially all of their assets," the motion states.

The cash deposit in the amount of $8.1 million would be applied to the purchase price of the assets. Blackjewel would return the money should Contura be outbid.

The deal with Contura, Blackjewel says, is its only hope of avoiding a permanent operational shutdown of the Eagle Butte, Belle Ayr and Pax mines. Under the agreement, Contura would return the majority of the mine employees to work.

Contura would fund the sale process. Blackjewel says the cash provided by Contura would be available for distribution to creditors.

"Without Contura's agreement to the Stalking Horse Sale, including the purchase deposit to fund the sale process, none of that would be possible and the debtors would likely be forced to immediately convert these cases to cases under Chapter 7," the motion states.

In addition to the proposed sale, Blackjewel seeks to terminate its 401(k) program. That plan would not be assumed by Contura as part of the potential sale.

In order for employees who have been locked out of their job sites for over three weeks to receive the money locked up in their respective 401(k) plans, Blackjewel proposes to terminate the program.

Blackjewel employees have sought to access their 401(k) funds since Blackjewel filed for bankruptcy July 1 and, upon failing to secure debtor-in-possession financing that day, sent its workers home. The money, however, is not available to people still employed by the company.

Some have quit in order to access those funds.

A hearing on the motion is set for 12:30 p.m. MDT Thursday.

Although Contura transferred the two Wyoming mines to Blackjewel in 2017, Contura is still financially responsible to the state for the costs of reclamation, which totals nearly $250 million.

Blackjewel operates some 32 properties in total and holds over 500 mining permits, more than any other mining enterprise in the country.

Its Wyoming mines produced 35.5 million tons of coal last year. The average lifespan of the two mines is 20 years, and production capacity between the two is 50 million tons.

More From K2 Radio