Peabody claims that the lawsuit filed by Patriot in March to hold Peabody to its obligations to pay retiree benefits is not “ripe” because it depends on the outcome of Patriot’s negotiations with its union.

The issues raised by Patriot “do not present an ‘actual controversy’ between the parties that is ripe for judicial resolution”, lawyers for Peabody wrote, calling for the March suit to be dismissed, according to Bloomberg.

The suit asked the Bankruptcy Court to declare that Peabody must continue to pay for the healthcare costs of retirees who were employed by Peabody entities that were transferred to Patriot when the company formed, Patriot said in a March statement.

Peabody responded with a statement shortly after stating it had fulfilled its contractual healthcare obligations to Patriot since the spin-off.

“Our contract with Patriot Coal states that we will fund a portion of Patriot's retiree healthcare expenses for specified retirees,” Peabody said in a statement on Thursday.

“We have been providing funds under this contract since the spin-off.

“The contract also appropriately states that, should Patriot's benefit obligations decrease, our funding would proportionately be reduced.

“Patriot is taking the untenable position that our payments should continue in full in the future even if Patriot's expenses are reduced.

“Such a claim is not only unreasonable but counter to the fundamental basis of the language in the contract.

“These are Patriot's obligations and, to the extent they are reduced, we will meet our agreement with Patriot to fund the new lower levels.”

In its most recent filing on Monday Peabody said that bankrupt Patriot shouldn’t blame its financial problems on the 2007 spin-off that split the two companies.

Patriot is seeking permission to investigate its 2007 spin-off from Peabody, claiming the transaction rid Peabody of $600 million in healthcare and environmental liabilities.

“Although the problems that face Patriot today originated elsewhere, some are attempting to lay at Peabody’s feet the consequences of Patriot’s failure,” Peabody lawyers wrote.

Patriot filed for Chapter 11 bankruptcy reorganization in July, with months of negotiations, strikes and slurs preceding the court action.

The bankruptcy court is scheduled to decide the case on April 23.