NEWS

U.S. Steel claiming $2.2 billion in debt owed by former Stelco

Thursday, Oct 29, 2015

U.S. Steel is asking the courts to order it's beleaguered Canadian counterpart to pay back what it says is $2.2 billion in debt.

It's the latest in a complicated legal battle that has huge implications for Hamilton, as jobs and pensions for thousands of people lie in the balance.

According to new court documents, U.S. Steel's American parent company is seeking a claims process trial date on Nov. 20.

In the documents, the company says it is owed over $2.2 billion in unsecured claims and a further $213 million in other claims.

The claim has long been a part of the bankruptcy protection process initiated in September of 2014. But a hearing into the claim has been pushed aside as the process focused on other issues. Now, with the recent transition plan that will see U.S. Steel Canada become a stand-alone company, the American company is asking the court to rule on the debt claim.

But the company is milking a version of itself for cash, in a way. U.S. Steel bought the former Stelco back in 2007, but the plant was idled soon after the purchase.

With pensions hanging in the balance, the federal Industry Department sued the company in 2009 but then dropped the suit in 2011.

Since then, U.S. Steel separated itself on paper from its Canadian operations in Hamilton and Nanticoke, referring to them collectively as U.S. Steel Canada, and filed for bankruptcy protection.

In May, an Ontario Superior Court judge ruled that the secret deal between the Canadian government and U.S. Steel that allowed the steelmaker to renege on its obligation to make steel in Canada would remain a secret.

But a Court of Appeals judge said Monday that the appeal to unseal the 2011 "secret deal" between the federal government and U.S. Steel will be heard on Nov. 19 — an expedited timeline related to all that's going on in the unfolding bankruptcy protection restructuring for U.S. Steel Canada.

If the Canadian arm is completely forced into bankruptcy, U.S. Steel could get first crack at the remaining assets, leaving little for debts or pensions.

Earlier this month, a bankruptcy court judge approved a transition plan that allowed the company to suspend health-care benefits for tens of thousands of retirees as it moved to becoming a stand-alone entity.

 

cbc.ca

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