NEW YORK The
secured lenders and former executives of SGK Ventures LLC, the
bankrupt specialty steel scrap processor formerly known as
Keywell LLC, have responded to a multimillion-dollar lawsuit
filed against them by unsecured creditors, disputing claims
made in the suit and filing a motion calling for its
The former executives
and secured lenders call for the U.S. Bankruptcy Court in
Illinois to "dismiss the complaint ... for its failure to state
claims and to strike its demands for punitive damages,"
according to documents filed Feb. 19.
They also issued a
press release Feb. 20, entitled "Keywell Executives Fire Back,"
describing the claims by the official committee of unsecured
creditors as "senseless, illogical and unsupported by the
"In addressing the
central theory (of the lawsuit), there is a paraphrased
question asked by defendants of the plaintiff," the press
release said. "Are you seriously claiming that (six) years ago
in 2007, Keywell made decisions and took actions knowing that
nearly a full year later the most serious banking crisis the
world has ever seen would occur, that would lead to one of the
longest recessions the world has ever had and through it all
... Keywell continued to operate its business in the normal
course, paid out over $1 billion in purchases to its suppliers
and vendors, and it did so with a plan to file for bankruptcy
in September 2013, harm its creditors, harm its reputation,
lose its entire business investment and business future, and
Keywell did all of this so it could protect itself from
business decisions and actions it made (six) years
creditors committeea group that includes Fort Wayne,
Ind.-based OmniSource Corp. and Orange, Calif.-based SA
Recycling LLCfiled the original lawsuit in December as
part of the processors bankruptcy proceedings (
amm.com, Dec. 20). The suit, which seeks about $65
million in damages, accuses the processors former
executives of allegedly engaging in "a pattern of improper
self-dealing" that saw management "lining their own pockets to
the detriment of Keywell and its creditors."
The press release
described the lawsuit as "headline-grabbing" and criticized its
use of "ample adjectives and adverbs."
reputations, and it may make some feel better about how they
were put in this position, but it lacks a reasonable basis for
making its allegations, is wildly expensive and should not be
allowed to continue to waste creditor money in its pursuit
while significantly benefiting only the lawyers and
consultants," it said.
David A. Agay of
Cleveland-based McDonald Hopkins LLC, the law firm representing
the unsecured creditors committee, declined to comment on
the motion to dismiss the lawsuit or the press release.
The bulk of
Keywells assets continue to operate under the name
Keywell Metals LLC, a venture established by Southlake,
Texas-based investment firm Prophet Equity LP, which acquired
the assets for $15.8 million in December (
amm.com, Dec. 12). Former Keywell president and
chief executive officer J. Mark Lozier now serves as president
of Chicago-based Keywell Metals.