The move will help it shore up liquidity and whittle down its debt, which was $6.3bn (£4.4bn) at the end of 2015, the firm said as it made a Chapter 11 bankruptcy filing.
The company's mines and offices will continue to operate, and are expected to continue doing so for the duration of the process.
It comes as low energy prices, a weak Chinese economy, tougher environmental regulations and the rise of US shale gas industry have sparked a wave of bankruptcies across the US coal mining industry recently.
"This was a difficult decision, but it is the right path forward for Peabody. We begin today to build a highly successful global leader for tomorrow," the company's chief executive, Glenn Kellow, said in a statement.
"Through today's action, we will seek an in-court solution to Peabody's substantial debt burden amid a historically challenged industry backdrop."
"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."
Peabody warned of a possible bankruptcy risk last month, saying it had missed a $71m debt repayment, invoking a 30-day grace period at the end of which payments must be made to avoid default.
Peabody has $6.3bn debt at the end of 2015, and posted a $2bn net loss that year.