Bankruptcy, Ownership Turnover and the Fate of U.S. Coal Mines

This paper examines the survival dynamics of U.S. coal mines following ownership turnover, with particular attention to the role of financial distress and bankruptcy procedures. Using mine-level data on production, employment, and ownership from the Mine Safety and Health Administration, we show that mines transferred through private workouts are substantially more likely to close within a few years. In contrast, court-supervised transfers reduce the likelihood of rapid shutdown relative to private transactions, but their survival rates remain indistinguishable from mines without ownership turnover. These results speak to the efficiency of bankruptcy institutions: private transactions, in line with White’s (1994) model, may produce pooling equilibria where nonviable and distressed-but-viable firms are indistinguishable, leadingto inefficient continuation or liquidation decisions. Court supervision appears to mitigate shortterm inefficiency by screening and reallocating viable assets, but without delivering sustained survival gains.