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
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.