Patriot Coal’s (NYSE: PCX) share price dropped by 95% from its 52-week high recently and then gyrated wildly on worry that the company could continue as a going concern. The riddle about Patriot Coal’s future was answered after the closing bell. It has filed for Chapter 11.

In its news release, the firm reported:

Patriot and substantially all of its wholly owned subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Southern District of New York. Patriot has taken this action in order to undertake a comprehensive financial restructuring. Patriot expects its mining operations and customer shipments to continue in the ordinary course throughout the reorganization process.

Patriot believes that the protection afforded by a court-supervised reorganization process, including the ability to access new financing, will provide the Company with additional time and flexibility to address its financial challenges and position Patriot for long-term viability and success.

In conjunction with its reorganization, Patriot has obtained a commitment for $802 million in debtor-in-possession (DIP) financing from Citigroup Global Markets Inc., Barclays Bank PLC, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as joint lead arrangers. Upon approval by the Bankruptcy Court, the new financing and cash generated from Patriot’s ongoing operations will be used to support the business during the reorganization process.

Douglas A. McIntyre