Peabody Energy Corp had created now-bankrupt Patriot Coal through a spin-off. The company said that the offer it had proposed to settle claims related to healthcare benefits for Patriot Coal retirees had been rejected by the United Mine Workers of America (UMWA).

Both Peabody and Patriot had been fighting over the funding of benefits for around 3,100 retirees. Peabody had agreed on continuing its coverage for the said retirees after the October 2007 spin-off to Patriot.

In a statement, Peabody said that its mid August offer to settle all claims with the UMWA could have been used to give the retirees with healthcare benefits that would last a lifetime. The offer was comparable to those employees who are actively working in Peabody.

Peabody's Senior VP of Global Investor and Corporate Relations Vic Svec said, "The UMWA retirees who have been traveling to St. Louis to rally for healthcare benefits have a right to know that a good faith settlement offer was on the table, and that union leadership rejected it."

Representatives from both UMWA and Patriot Coal could not be immediately reached to comment outside of US business hours.