CHICAGO Creditors of bankrupt RG Steel LLC want the authority to collect more than $238 million from the steelmakers parent company and its top executive, alleging that they delayed the steelmakers Chapter 11 filing to benefit themselves.
Renco Group Inc. and its chairman and chief executive officer, Ira Rennert, postponed the "inevitable bankruptcy" of RG Steel in part because they were "motivated by Rennerts personal gain," according to documents filed in U.S. Bankruptcy Court in Delaware by counsel for the unsecured creditors committee.
New York-based Renco Group denounced the allegations in an e-mail to AMM as "frivolous and without merit." Rennert could not be reached for comment.
The committee alleged in the court filing that Renco and Rennert delayed filing in part to avoid possible liability for underfunded pension plans and before the expiration of a coke-supply agreement with Mountain State Carbon LLC (MSC).
MSC has been a 50-50 joint venture between RG and Dearborn, Mich.-based Severstal North America Inc. since 2011 (amm.com, Jan. 17).
The delay of the Chapter 11 filing, allegedly undertaken in part to avoid drawing down cash collateral from a lender, "created a cloud of uncertainty" around the value of MSC, making it "nearly impossible to market" and perhaps significantly reducing its value, the unsecured creditors claimed in the court filing.
RG Steel should have filed for bankruptcy and had been prepared to do so as early as December 2011, the court filing said. "No later than November 2011and, in fact, significantly earlierthe company was hopelessly insolvent," the creditors committee alleged.
RG Steel filed for bankruptcy in May last year (amm.com, Oct. 10).
Objections to the creditors motion are due by Jan. 31 and a hearing is scheduled for Feb. 14.