World's leading coal miner Peabody Energy Corp has filed for chapter 11 bankruptcy protection in the US, following a struggle to stay afloat in the wake of sharp dip in coal prices, intense competition and stringent regulations, all of which had led to its inability to pay debt of $10.1bn.
It had taken much of the debt to fund its expansion into Australia, reported Reuters.
However, its Australian mines are not part of the bankruptcy protection.
This is claimed to be one of the biggest bankruptcy filing after prices of energy and metal began dropping since 2014.
As per the court documents, Peabody's assets were valued at $11bn while it had debt of $10.1bn at the end of 2015.
In a statement, Peabody CEO Glenn Kellow said: "This process enables us to strengthen liquidity and reduce debt, build upon the significant operational achievements we've made in recent years and lay the foundation for long-term stability and success in the future."
The firm had taken debt to finance its expansion in Australia to tap the growing demand in Asia, especially China. However, China is now trying to cut down pollution levels and is exploring options other than coal.
In March, the company had delayed making payments on two loans.
The firm has agreed to opt for $800m in debtor-in-possession financing from secured and unsecured lenders. However, this has to be approved by the court.
In the last two years, several coal firms including Patriot Coal and Alpha Natural Resources had filed bankruptcy protection.