Bankrupt Patriot Coal (PCXCQ.OB) and its creditors are looking at whether the firm's spinoff from Peabody Energy (BTU) in 2007 was a "fraudulent transfer" aimed at relieving the latter of retiree health and pension benefits, problematic mines and other liabilities. Patriot and the creditors could gain "a sizable recovery" if evidence of fraud is found. Peabody naturally denies that anything was amiss.
If you will look at the 2007 and 2008 annual reports, Patriot management brags how strong the balance sheet was. I think whatt did them is was the acquisition in 2008 which doubled their size and headaches when coal prices fell. This will be a hard thing to prove.