U.S. Steel bankruptcy hearing adjourned for negotiations
Steelworkers’ unions and the province both oppose U.S. Steel’s plan
A hearing on U.S. Steel Canada's proposal for bankruptcy protection was cut short Monday morning as lawyers for the various sides reportedly worked behind the scenes on a negotiated deal.
Monday was supposed to be the first day of hearings in a Toronto courtroom on U.S. Steel Canada’s proposal, which includes taking a $185 million debtor-in-possession (DIP) loan from its American parent company, U.S. Steel Corp. The company, which has two steel mills in Hamilton and Nanticoke, Ont., was given short -term bankruptcy protection under the Companies’ Creditors Arrangement Act (CCAA) last month.
“It’s very important to you … I’m well aware of that.- Supreme Court Justice Herman Wilton-Siegel
Lawyers from both sides met over the weekend, with hopes of reaching an agreement on the DIP matter and what should happen with employee pensions.
U.S. Steel Canada declined to say if any agreement had been reached, saying only the adjournment would allow “continuing discussions with our stakeholders on how best to manage the ongoing CCAA process.”
An emailed statement from the company said it still intends to seek court approval for DIP financing, as well as several other measures it says are “fundamental steps toward the successful restructuring of this business.
NDP MPP Paul Miller, speaking to reporters after the hearing was adjourned, said he heard a tentative agreement was in place, but did not elaborate on what it included. But Rolf Gerstenberger, President of Local 1005, which represents some 600 current U.S. Steel Canada employees, said there was no deal.
“That’s all back room stuff,” Gerstenberger said, adding he would prefer to speak about actual agreements.
When asked what he hoped would come from the court proceedings, Gerstenberger said he wants U.S. Steel to honour its commitments to employees in Hamilton.
“It’s outrageous you can go after pensioners in this country,” Gerstenberger said.
Many of the steelworkers, who took a bus to Toronto early Monday morning and staged a rally outside the court at 9 a.m., said they weren’t surprised by the adjournment.
Some were present for the Stelco Inc. bankruptcy proceedings, which stretched on for some 28 months in 2004.
Gerstenberger said he doesn’t expect this case to take as long, particularly because U.S. Steel wants to sell its Canadian operations by Oct. 31, 2015.
He had warned union members of the possibility of an adjournment or other legal snags.
CCAA hearings, he said, are like the “wild west,” where judges are largely allowed to dictate what happens in court.
In the overflow room, as they awaited the hearing to start — it was set to begin at 10 a.m., but didn’t get underway until 11 a.m. — one steelworker bellowed: "Thanks for coming, guys! Ever been to the circus, or zoo? You're about to see it now.”
Some, once it was over, muttered they should have stayed home in bed.
As they filed back onto the bus, the workers, both retired and current, said they would be back for future court dates.
Eyes on Hamilton
Miller said the country’s eyes are on Hamilton during these proceedings, as the case sets a precedent for how the judicial system protects workers in Canada when they’re up against an American corporation.
Supreme Court Justice Herman Wilton-Siegel granted the adjournment until Tuesday at 2 p.m. ET, and warned there may be another request for further adjournment then.
The judge, acknowledging the overflow room filled with steelworkers, saying “it’s very important to you … I’m well aware of that.”
He said he during the proceedings, there “should be a hearing in public.”
Justice Wilton-Siegel, in his remarks to the court, said he has already requested a larger courtroom.
Several parties, including the province, have objected to parts of the company's proposal.
Mayor Bob Bratina attended the hearing and mayoral candidate Brian McHattie also went to Toronto for the rally, and spoke to the crowd of workers. McHattie sits on the city's steel committee.
U.S. Steel Canada, which purchased Stelco’s assets in 2007, declared bankruptcy last month. Now, it wants to take the $185 million from U.S. Steel Corp., its Pennsylvannia-based parent, in debtor-in-possession financing.
Steelworkers’ unions and the province both oppose U.S. Steel’s plan, saying it gives too much power to the American side of the company. The province, which regulates pension plans, is also worried it could be on the hook for millions if the company backs out of pension contributions for its retired workers.
U.S. Steel was given Companies’ Creditors Arrangement Act (CCAA) protection because of its ongoing losses, $3.9 billion in debt and equity, and $837.7 million in pension solvency deficiency, court filings show.
In Hamilton, the court decision could have ramifications to those earning a pension from the company. There are 12,614 people in pension plans, documents show, and 771 active members — the bulk of whom are represented by the union Local 1005.
U.S. Steel Canada has steel operations in Hamilton and Nanticoke, Ont. The court filings say it hopes to have both operations sold by Oct. 31, 2015.