Coal producer Alpha Natural Resources Inc., which filed for Chapter 11 bankruptcy protection in August, has reached an agreement with its lenders to sell a core group of assets, including its holdings in the Marcellus Shale of Southwest Pennsylvania.

The lenders made a $500 million stalking horse bid for coal mines and equipment in Pennsylvania, Virginia, West Virginia and Wyoming, along with an offer for Pennsylvania Land Resources Holding Co. LLC (PLR), according to a Feb. 8 filing in the U.S. Bankruptcy Court for the Eastern District of Virginia. PLR controls 25,000 acres in the Marcellus of Greene County, PA. Alpha’s natural gas business also includes shares of publicly traded common stock in Appalachian pure-play operator Rice Energy Inc., which would also be sold for proceeds under the agreement.

At the end of 2015, Alpha held fewer than four million shares of Rice Energy. The gas assets are also included on a list of unencumbered assets, meaning they are free and clear of any creditor claims or liens that would make it more difficult to sell them, according to the filing.

Alpha has struggled with debt and since the bankruptcy filing has announced hundreds of layoffs. The company formed a 12,000 net acre Marcellus joint venture (JV) in May 2013 with the French company EDF Trading Resources LLC. By last year, the partnership’s acreage had more than doubled. Last July, Alpha bought out EDF’s interest in the JV for $126 million and said it would begin proving up the acreage, which is in an area where other operators have seen repeated success in both the Marcellus and Utica shales (see Shale Daily, July 2, 2015).

In 2014, Alpha also sold its stake in a Marcellus JV with Rice Energy in exchange for the common stock it currently holds in the company and $100 million in cash.

The stalking horse bid sets a floor for the value of the coal and gas assets. Alpha said in its filing that it would conduct an open bidding process in which interested entities could purchase all or any portion of the assets.

The sale process, Alpha added, would help the company emerge from bankruptcy by June. The deadline for competing bids is March 28. The bankruptcy court would have to approve a final sale.