n" readability="38">Oct 27 (Reuters) - Arch Coal Inc moved closer to bankruptcy on Tuesday after it gave up on a debt swap proposal that had been aimed at boosting the coal miner's liquidity.
Heavily-indebted Arch Coal has been hit by weak demand and stricter regulation, factors that have already pushed Alpha Natural Resources and Patriot Coal into Chapter 11 bankruptcy protection.
Arch Coal said on Tuesday it is currently working with creditors to restructure its balance sheet.
Arch's debt restructuring plan includes swapping existing debt for longer-term securities with the aim of reducing total debt and annual interest expenses by around 20 percent.
Last week, a request by a unit of GSO Capital Partners that holds some of Arch Coal's unsecured notes seeking to prevent a group of senior lenders from blocking the debt swap was turned down by a New York State Supreme Court judge.
Senior lenders have argued that the terms of the debt exchange reduce the amount they stand to recover, while junior bondholders have said a debt swap deal is necessary to keep the company from filing for bankruptcy. (Reporting by Tracy Rucinski and Amrutha Gayathri; Editing by Saumyadeb Chakrabarty)
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