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
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."