NEW YORK The Pension Benefit Guaranty Corp. (PBGC) has filed a $97.2-million lawsuit against RG Steel LLC parent Renco Group Inc.
Renco sold 24.5 percent of its ownership in the now-bankrupt steelmaker to Cerberus Capital Management LP in January 2012 in an effort to avoid meeting pension payment obligations, the lawsuit filed in U.S. District Court in New York claims.
The federal agency also alleges that Renco concealed and suppressed facts related to the impending transactionfacts that, had PBGC known, would have prompted the agency to terminate the original pension plan and make Renco financially responsible for its obligations.
"One of Rencos principal purposes in entering into the transaction with Cerberus was to evade liability ... by breaking up the Renco-backed controlled group of RG Steel, thereby purportedly allowing Renco and the Renco controlled group members to avoid financial responsibility for the (pension) plans," the lawsuit said. "The transaction was consummated after PBGC had notified Renco of its concerns and Renco had falsely assured PBGC that the transaction would not go forward and the controlled group would remain intact."
The lawsuit seeks $87.2 million in unfunded benefit liabilities, $4.9 million in minimum funding contributions and $5.1 million in termination premiums, plus interest as of Aug. 31.
"The facts will show that these claims are baseless," a Renco spokesman said.
Earlier in January, creditors of RG Steelwhich filed for Chapter 11 bankruptcy protection last yearsought to collect more than $238 million from Renco and its chief executive officer, Ira Rennert, alleging that Renco delayed the bankruptcy filing to benefit itself (amm.com, Jan. 18). Renco called the lawsuit "frivolous and without merit."