During a hearing on Tuesday morning in the US Bankruptcy Court in St Louis, Patriot Coal officials presented an agreed-upon proposed order to Judge Kathy Surratt-States.

If the proposed order is approved, Patriot will provide benefits to its non-union, salaried retirees through July 31, establish a voluntary employee beneficiary association trust for the retirees and provide $250,000 for it.

The company would cap the maximum benefit of the retirees’ life insurance at $30,000.

Lawyers for Patriot told Surratt-States the deal was encouraging as talks with unionized employees moved forward.

The United Mine Workers of America represents the unionized employees, which account for about 42% of Patriot’s 4000 employees.

On April 29 St Louis-based Patriot is due to present the court with a motion to change agreements with UMWA.

“Contrary to what has been reported, Patriot is not proposing to eliminate healthcare for retirees,” a company spokeswoman told ILN last week.

“Rather, our proposal allows for meaningful healthcare coverage for [UMWA] retirees at a level that Patriot can afford.”

Patriot filed a motion to modify UMWA benefits last month.

The motion filed at the St Louis Bankruptcy Court requested modifications to Patriot’s existing collective bargaining agreements with the union.

These included establishing a VEBA trust to provide healthcare for retirees represented by UMWA and changes to pay, benefits and work rules for unionized employees, Patriot said in a statement.

The company said its UMWA-related healthcare obligations would be transferred to the VEBA trust.

Funding for the trust would consist of an ownership stake in the reorganised company, profit sharing of a maximum of $300 million and an initial cash contribution of $15 million.

UMWA president Cecil Roberts said in a statement that the proposed changes were “totally unacceptable”

“This is the path we have been saying Patriot would take from the very beginning of this bankruptcy last July,” Roberts said.

“They’re demanding massive changes to the collective bargaining agreement and they want to scrap the health care benefits our retirees earned through decades of blood and toil.

“These demands by the company are totally unacceptable to the UMWA and unnecessary for the company’s survival.”

The union said that the funding Patriot proposed to provide for the VEBA covered a tiny fraction of current costs.

Also at Tuesday morning’s hearing, lawyers representing Patriot Coal and Peabody Energy presented arguments about how many documents Peabody Energy should be required to provide to Patriot in a lawsuit it filed against Peabody to determine the context of the company’s 2007 spin-off.

Patriot filed for Chapter 11 bankruptcy reorganization in July 2012.

Months of negotiations, strikes and slurs precede this week’s court action.