Steelworker union: U.S. Steel filing is 'bankruptcy fraud'
Steelworker union Local 1005 says the recent court filings by U.S. Steel is “bankruptcy fraud” and a path to abandoning Hamilton altogether—not only ditching the liability of its pensioners, but the cleanup costs of leaving the city, too.
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Union head Rolf Gerstenberger made the statement at Local 1005’s headquarters at Barton and Kenilworth, questioning the company’s motives, repeatedly recalling a $58-million settlement U.S. Steel was has agreed to pay for price-fixing case in July for actions dating back a decade, and calling the process of bankruptcy protection theft.
“It’s an unconscionable scam from A to Z, and Local 1005 is not going to remain silent on any of it,” Gerstenberger said to a crowd of some 75 union workers, as well as MPP Paul Miller (Hamilton East-Stoney Creek) and Mayor Bob Bratina.
During Thursday’s question period in Ottawa, Hamilton Mountain NDP MP Chris Charlton asked if the federal government would change bankruptcy laws to put pension obligations at the top of payout list. It was a question Conservative MP Keven Sorenson, the Minister of State for Finance, ignored and answered their government hoped to create a “respectable retirement” for Canadians, but did not address where pensions fit in a bankruptcy payout pile.
U.S. Steel pays price-fixing penalty in July
In July, U.S. Steel reached a $58-million (US) settlement for a price-fixing scheme lawsuit beginning in 2008 involving multiple steel companies, including U.S. Steel and ArcelorMittal.
According to reports from the Northwest Indiana Times, U.S. Steel denied claims that steelmakers reduced capacity at the plants to drive up steel prices, and that U.S. Steel said they settled to avoid future legal costs.
Gerstenberger said Thursday they’re doing the same now — only they don’t have to work with the then Stelco plant to lower capacity since they own the plant themselves.
Union says bankruptcy protection meant to cut workers pensions
Gerstenberger also said the union rejects the filings as a whole, including claims that labour costs burdened the company’s profits. In turn, he questioned the motives of the purchase of Stelco, citing record profits for U.S. Steel in 2007 when the plant was fully operational, before the blast furnaces were turned off.
“We are reliving the CCAA (Companies' Creditors Arrangement Act) bankruptcy fraud to get rid of the worker’s pensions,” said Gerstenberger.
He said the debtor-in-possession financing, called DIP financing, through the CCAA will put inter-company debts ahead on pension requirements through the court-supervised restructuring.
MPP Miller calls filings an 'instant replay' of Stelco days
On Wednesday, U.S. Steel filed for bankruptcy protection with the Superior Court of Ontario. The process allows a company to restructure under the court’s protection. If the court cannot approve a restructuring proposal, U.S. Steel would enter bankruptcy liquidation, although there is no hard time limit on how long CCAA protection could last.
Miller called the recent filings an “instant replay” of what happened with plant a decade ago.
“I went through this 10 years ago,” Miller said. “At the time I was absolutely disgusted with the behaviour of the judicial system and the federal government’s participation.
“The bankrupt and insolvency acts in this country are antiquated and outdated… This is simply a corporation attacking their liability of pensioners. They have about 9,000 pensioners at this plant in this area and they want to get rid of that liability.”
“Why did they buy it? In my opinion they bought it to eliminate competition,” Miller said. “I think that was their goal right from the start but nobody admits that.”
Bratina echoed Gerstenberger’s talking points at the Thursday afternoon meeting.
“Why is Hamilton being a sacrificial lamb? Why are we in this position where they (U.S. Steel) did make money in 2007, they had record profits,” Bratina said. “That shows that the manufacturing capabilities are there so why isn’t management trying to maximize the profitability of these plants.”
Asked why the union and the city shouldn’t embrace the sale and move on what appears to be a soured deal, the mayor was blunt.
“U.S. Steel is reluctant to sell with a competitor. The simplest thing would be to make a deal with ArcelorMittal and away you go. But that’s not on their books,” Bratina said.