Former President and CEO Jeffery Hoops stripped Blackjewel LLC of "tens of millions of dollars in assets" ahead of the coal producer's messy Chapter 11 bankruptcy, the company said in a revised complaint.

Blackjewel had already sued Hoops over alleged self-dealing ahead of the coal producer's bankruptcy, but a Jan. 21 filing details new, specific claims against the former executive. Blackjewel has struggled to complete its bankruptcy restructuring since it started in July 2019 with abrupt layoffs and mine idlings, prompting one group objecting to its most recent plan to call the company "a figurative smoking hole in the ground."

Already facing legal issues with Revelation Energy LLC over failure to pay bank loans associated with his eastern U.S. operations, Hoops used Blackjewel to acquire two large Powder River Basin coal mines. The revised complaint said Hoops repeatedly caused Blackjewel to enter into financial transactions with Lexington Coal Co. LLC, an entity owned by a trust affiliated with Hoops and his family, without receiving adequate compensation in return.

"Hoops' breaches were motivated by his personal financial interests, including his desire to move assets beyond the reach of creditors, and was an intentional, willful, and wanton disregard of his fiduciary duties to plaintiffs," the filing said. "Hoops' conduct was undertaken maliciously for the purpose of injuring plaintiffs by stripping them of valuable assets in order to enrich [Lexington Coal] for the benefit of himself and his family members."

The complaint cites the example of a lease between Revelation Energy, a party to the bankruptcy of Blackjewel, and Lexington Coal. Lexington Coal agreed to make lease payments on Revelation's behalf to use four highwall miners with the option to purchase the equipment for $1 before the end of the term of the lease. The complaint said that in an email to a representative of Lexington Coal, Hoops wrote that he paid $6 million for equipment that Revelation had bought for $28 million and that it was likely worth up to $16 million on the open market.

"So trust me, I am doing the right thing for [Lexington Coal]," the filing quoted Hoops as saying in an email.

The complaint said Hoops similarly acted to benefit Lexington Coal in a transaction where the company would receive mining rights and access in addition to a $20 million payment to assume reclamation obligations.

"Keep in mind, I own 90% of [Lexington Coal] and only 37.5% of Blackjewel, so I am not going to do anything that is not better for [Lexington Coal] than Blackjewel," the complaint quoted an email from Hoops to a representative of Lexington Coal. "Yes, there are some reclamation liabilities coming with these, but they are very low-cost operations, and the $20 million will cover this cost several times over."

The revised filing also detailed an asset purchase agreement and permit transfer agreement formed in late 2017 and early 2018 that transferred leased real property, mining permits, equipment, inventory and other significant assets from Revelation and Blackjewel to Lexington Coal. Blackjewel alleged "millions of dollars" of assets were transferred through the asset purchase agreement without any valuation or proper recordkeeping.

Blackjewel alleged that since the deal was closed in March 2018, Lexington Coal has failed to transfer permits with substantial reclamation obligations while pursuing "more desirable" permit transfers. At the same time, Lexington conducted mining operations on leased property obtained in the transaction and sold over $25 million in coal from the properties, Blackjewel said.

Hoops also encouraged and allowed Lexington to use mine equipment belonging to Revelation and Blackjewel, the complaint said. At least 28 pieces of mining equipment allegedly still have not been accounted for or returned.

Blackjewel accused Hoops of breaching his fiduciary duty. The complaint accused Lexington Coal of contract breach, unjust enrichment, aiding and abetting breach of fiduciary duty, and fraudulent transfers.

Blackjewel is seeking recovery of damages from Lexington Coal and Hoops, including punitive damages.