Arch Coal Inc. (NYSE: ACI) is getting some pushback from investors holding the company’s $1.9 billion term loan and seeking to stop the company from going through with a debt swap that would give the coal miner more flexibility on how it handles its money.

According to Bloomberg News, Arch is approaching the $550 million cash and available credit liquidity minimum specified in the loan’s covenants. Arch wants to swap up to $2.38 billion in borrowing for new debt that would include another $404 million in new loans. Existing lenders argue that the swap dilutes their claims on the company’s assets.

Does a debt swap save Arch from a bankruptcy filing? Probably not, but it could at least buy the company some time, according to Bloomberg. But time for what?

Honestly, the company’s 10-for-one reverse split to save the company from being delisted on the New York Stock Exchange when the shares were trading at around $0.13 apiece was another desperation move, and it did not work either. Shares opened Friday morning at $1.31, post-split, not much of an improvement.

Alpha Natural Resources and Walter Energy have recently filed for bankruptcy protection, while James River and Patriot filed last year. Consolidation in the industry is inevitable as demand for coal, both domestically and abroad, sinks. And with demand goes prices, which have sunk for both thermal and metallurgical coal.

The only way Arch can stave off bankruptcy is if coal prices magically rise — a lot. That is not going to happen. And any buyer for coal company assets is going to be paying pennies on the dollar. The recalcitrant lenders may be right to try to protect their position because it has virtually no chance of improving.

Shares traded down about 6.1% in the Friday afternoon, at $1.23 in a post-split range of $1.00 to $33.50.

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