According to Addington’s bankruptcy filing in the U.S. Bankruptcy Court for the Eastern District of Kentucky, he owes $37.2 million to numerous creditors while having assets of $7.1 million. Caterpillar Financial Services Corp. is the largest unsecured creditor, owed $9.5 million for leased equipment that Addington personally guaranteed, court records show.
One of Addington’s companies, Appalachian Fuels LLC, has been undergoing bankruptcy reorganization for almost three years, after three creditors in mid-2009 filed an involuntary petition with the eastern Kentucky court to force the coal producer into Chapter 7. Since then, Appalachian Fuels has been selling off assets, for the most part one at a time, including a deal with Massey Energy Co., now owned by Alpha Natural Resources.
In Addington’s case, the trustee told the court the case should be transferred to Chapter 7 to give creditors a better chance to recoup their losses.
Through his attorney, Donald Mallory, Addington disagreed. In an April 12 filing with the court, Mallory said, “the practical realities and necessities of the…case demonstrate that there is no other party with the likelihood of providing a substantial recovery to creditors of the estate other the debtor. In fact, the debtor’s ability to formulate a plan that is approved by the creditor constituency will almost certainly lead to higher recovery to creditors than would protracted litigation whereby the only parties who would benefit would be the respective counsel.”
Mallory disputed assertions by the liquidating trustee in the case that Addington, who underwent multiple surgeries after being diagnosed with throat cancer in 2006, is “under the influence” of prescribed narcotic medication and, as a result, is “incompetent.”
Addington has said he was “incapacitated,” not incompetent, when he personally guaranteed coal company debts, his attorney stated. “The clear distinction being that while he was being prescribed narcotic medication as part of his medical treatment, he entered into personal guarantees and at such time, did not have the requisite capacity to enter into contracts, etc.,” Mallory said.
Addington no longer is suffering “any impairment as a result of medication which would impair or cloud his mental facilities in administering this estate,” Mallory said.
Court documents also show that Addington no longer owns a tiny island, Caye Chapel, off the coast of Belize. Addington purchased the island a quarter-century ago and developed it into a golf resort.
Information filed by Mallory shows the island was listed for sale at $75 million for several years. At one point, Addington had an offer for $50 million, “but it was rejected because it was thought to be too low,” Mallory said. Addington indicated the Bank of Belize attempted to foreclose on the property and took the equivalent of a deed in lieu of foreclosure.
