NEW YORK RG Steel LLC says it should retain its security interest in Mountain State Carbon LLC (MSC) but has been deprived of that stake by Severstal U.S. Holdings LLC since its bankruptcy filing last year.
RG Steel further claimed that under its agreement with Severstal, it should not be divested of its management rights to Mountain State Carbon after filing for Chapter 11 bankruptcy protection, according to documents filed Jan. 14 in U.S. Bankruptcy Court in Delaware.
RG Steel is seeking a declaration from the court that it did not cease to hold membership interest in Mountain State Carbon after it filed for bankruptcy, according to the court documents. The former steelmaker is also seeking an order stopping Severstal from interfering with restoration of its membership interest in the Follansbee, W.Va.-based coke-making operation.
Severstal claims RG Steel owes and is liable to Severstal for $100.7 million, an amount that is more than the value of the bankrupt steelmakers stake in the Mountain State Carbon operations (amm.com, Jan. 7). Severstal had asked the federal court to relieve a stay motion that is keeping it from enforcing a lien on RG Steels security interest in Mountain State Carbon.
MSC has been a 50-50 joint venture between RG Steel and Dearborn, Mich.-based Severstal North America Inc.since 2011. RG Steel claims that relations between the two parties deteriorated almost immediately after the 2011 agreement and never recovered, according to court documents.
A Severstal spokeswoman declined to comment.