Cloud Peak Energy, the coal giant that operates three massive mines in Montana and Wyoming, officially declared bankruptcy on May 10.

Bankruptcy cancels debts and shreds IOUs, so if Cloud Peak owes you money, there’s a good chance you won’t get it back. At the same time, a handful of corporate insiders, bankers, and high-paid advisors will come through the process flush with cash.

So, for those who can stomach it, here’s a brief look at who wins and who loses in Cloud Peak’s financial unraveling.

Winner: Cloud Peak’s Top Executives

It may seem strange, but the management team that drove Cloud Peak into a ditch will emerge from the bankruptcy process not merely unscathed, but rich.

Earlier this year, Cloud Peak’s board granted the company’s CEO, Colin Marshall, a one-time “retention” bonus of 150 percent of his annual salary—a total of $1.15 million—simply to steer the company through the bankruptcy process. Mr. Marshall will also get his regular annual salary of $765,000, and any additional bonuses and compensation the board chooses to grant him. All told, he earned $4.4 million in 2017, $4.3 million in 2016, and $4.2 million in 2015. With the addition of his big retention bonus, he could earn even more this year.

Yes, that’s right: the man who oversaw the collapse of his company’s finances and the permanent destruction of enormous amounts of shareholder capital will likely emerge from the bankruptcy process wealthier than ever.

The same people who drove Cloud Peak into insolvency will see a big payday during the bankruptcy process.

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The payout doesn’t end with Mr. Marshall. The company’s top executives—Heath Hill, Bruce Jones, Bryan Pechersky, Amy Clementson, and Todd Myers—could walk away with annual payouts of $2 million or more. In a recent SEC filing, Cloud Peak reported that total incentives and retention bonuses for its “key” executives could exceed $16 million for the year. (See the data source on page 45, under the line “KEIP/KERP”—which stands for “Key Employee Incentive Plan/Key Employee Retention Plan.”)

READ MORE: Cloud Peak suffers $50 million accounting loss in Q1

This year’s massive payout comes on top of a whopping $78 million that Cloud Peak’s top brass took home between 2010 and 2017, according to the company’s financial filings.

Two things make all this especially galling. First, the same people who drove Cloud Peak into insolvency will see a big payday during the bankruptcy process. Cloud Peak’s top brass made serious judgment errors, particularly by squandering $300 million on export-oriented coal reserves that the company never developed. Yet they’ve become the biggest winners during the company’s insolvency crisis.

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  • Second, Cloud Peak’s rank-and-file employees don’t get the sweetheart deals that the C-suite gets. Mineworkers will count themselves as lucky just to hang on to their jobs. Many could see cuts in hours, pay, and benefits. Cloud Peak terminated its retiree health plan last fall to save some money, so it’s clear that the company’s executives are willing to sacrifice their workers’ wellbeing even as they maximize their personal paydays.

    Winner: Investment Bankers and Bankruptcy Advisors

    Paradoxically, it costs a lot of money to go bankrupt. The process has grown so complex that troves of bankruptcy advisors, investment bankers, law firms and other specialists make a handsome living moving companies through the bankruptcy process. According to a filing with the SEC, Cloud Peak expects to pay a massive $40.2 million in bankruptcy-related “professional fees” through the first nine months of 2019. Last year, the company likely made additional payments to the “strategic alternatives” advisors over at J.P. Morgan—a team that tried to market Cloud Peak to 21 potential buyers without a lick of success, other than a single bid that Cloud Peak deemed too risky.

    After Cloud Peak’s bankruptcy wraps up, a handful of lawyers and bankers will have scored paydays that most ordinary folks can only dream of.

    Loser: “Unsecured” Creditors

    Insolvent companies typically owe more money than they can pay—and bankruptcy sorts out who gets paid, and who gets stiffed. The process has been compared to a cascade of waterfalls: creditors are sorted into “pools,” and an upper pool must be paid in full before any money can spill down into the next pool. If the money runs out, then pools at the bottom remain completely dry.

    Near the bottom of the bankruptcy waterfall lie legions of unsecured creditors. Some are bondholders. Others are big businesses. But many are the “little guys”: local mining service companies, parts suppliers, machinery repair outfits, and the like. Cloud Peak owes those folks money—and it’s doubtful that the company will ever pay them back.

    Loser: “Secured” Bondholders

    At or near the top of bankruptcy cascade stand the owners of $290 million of “secured” bonds, who in theory get paid in full before unsecured creditors get any money at all.

    READ MORE: Three lessons from Cloud Peak’s insolvency

    Yet Cloud Peak is in such deep financial trouble that even the secured bondholders may not see much of a payout.  The company has already admitted that its undeveloped mineral reserves, the Youngs Creek and Big Metal projects, have no economic value at all. Same goes for one of its three mines, Cordero Rojo. The company has tried for months to find a buyer, with no success. Meanwhile, its Spring Creek mine faces shrinking domestic demand and a volatile (and currently unprofitable) export market, even as its flagship Antelope mine faces severe operational challenges.

    Cloud Peak’s tenuous financial position raises the specter that Cloud Peak’s asset auction, currently scheduled for June 26, won’t raise a lot of cash. If the big bidders stay home, the secured bondholders will likely take over Cloud Peak’s mines. And in today’s coal market, owning a handful of troubled coal mines could mean losing even more money.

    Loser: Shareholders

    The bottom pool of the bankruptcy waterfall consists of Cloud Peak’s ordinary shareholders. If the bankruptcy auction produces an exceptionally high bid, shareholders could see some money at the end of the process. Yet the odds seem slim. When Peabody Energy and Arch Coal emerged from bankruptcy, shareholders were completely wiped out. It’s possible that Cloud Peak will have a different outcome, but a lot of money would have to flow into the top of the bankruptcy cascade for there to be any left over in the bottom pool.

    The Bottom Line: Insiders Win, Everyone Else Loses

    Filing for bankruptcy is more like going to the hospital than a funeral home: the whole point is to do some quick financial surgery and launch a healthier company back out into the world. And just like surgery, watching a bankruptcy unfold can turn your stomach. The same executives who oversaw the company’s collapse get handsome paydays. A handful of insiders and professionals make out like bandits. But just about everyone else in the process—creditors, investors, workers, and nearby communities—face financial losses and new risks. The results seem downright unfair. Which is just the way the winners like it.