TORONTO, April 14, 2015 /CNW/ - The United Steelworkers (USW) today called on the Ontario Superior Court of Justice to reject U.S. Steel's outrageous demand to give itself creditor preference over thousands of pensioners in the bankruptcy protection case of its subsidiary U.S. Steel Canada.
"Basically U.S. Steel says it owes itself and will take care of itself before fulfilling its legal obligations to its retirees," said USW Ontario Director Marty Warren.
"We will do everything we can to defend the interests of our members and pensioners and ensure that U.S. Steel is held to its obligations," Warren said.
The USW filed documents today in Superior Court as part of U.S. Steel Canada's bankruptcy protection case under the Companies' Creditors Arrangement Act (CCAA). The Steelworkers are challenging U.S. Steel's claims than it is owed more than $2 billion as a creditor of its own subsidiary, and that its claims should be accepted as "proven."
"It's shameful that U.S. Steel, which created this situation in the first place, wants to trample over seniors and see these pensioners worry about losing part of their incomes," said Gary Howe, incoming President of USW Local 1005, which represents employees and pensioners from U.S. Steel's Hamilton operations.
"We reject the credibility of U.S. Steel's claims and we are certainly going to challenge these claims," said USW Local 8782 President Bill Ferguson, representing employees and pensioners from U.S. Steel's Nanticoke operations. "U.S. Steel's claims should have to be proven in court, like any other claim."
Pittsburgh-based U.S. Steel has asked the court to accept its secured claim of US $122.4 million and two unsecured claims of US $127.8 million and CAD $1.85 billion.
The United Steelworkers asks the court to recognize that "U.S. Steel, as the sole owner and shareholder of U.S. Steel Canada, exercised complete control over USSC and its board of directors at all material times.
"USS, by virtue of its control of USSC, has directed USSC's operations in a way which has caused it to significantly underperform, requiring it to incur significant debts, and diluted the Beneficiaries' and the Union's recoveries in this proceeding," the union says.
"USS's conduct has completely undermined its own and USSC's obligations to the Union's members and Beneficiaries in respect of pensions and OPEBs, among other things," it adds.
U.S. Steel and its subsidiary are administrators of the pension plans and "as such, both entities owe fiduciary duties to the beneficiaries" of the pension plans, the USW says.
"It would be inequitable to allow USS's claims in these circumstances, at the expense of USSC's other creditors, and in particular the [union] and the [pension plan beneficiaries]. Its claims should be disallowed in their entirety or reduced, or subordinated to the claims of the [union] and the [pension plan beneficiaries]," the Steelworkers' documents state.
"It is crucial that these claims be tested through a robust process, on a full evidentiary record, prior to a determination of this Court as to their validity," the USW argues.
"USS's secured claim is based on security interests effectively granted by USS to itself, at a time when there was no independent board of directors or advisors, for insufficient consideration and in a manner which amounted to an improper preference and/or fraudulent conveyance," the union says.
"A significant portion of U.S. Steel's 'debt' is really in the nature of equity and should be re-characterized as such," the USW documents state.
"After directly undermining its own operations in Canada, it is bordering on the absurd for U.S. Steel to demand that it go to the front of the line, so that it can pay itself first and then leave pensioners, workers and their families in the lurch," said Ken Neumann, United Steelworkers National Director.
SOURCE United Steelworkers (USW)
For further information: Ken Neumann, USW National Director, 416-544-5951; Marty Warren, USW Ontario Director, 416-243-8792; Gary Howe, incoming President, USW Local 1005, 905-531-4078, firstname.lastname@example.org; Bill Ferguson, President, USW Local 8782, 905-537-8782, email@example.com; Ken Rosenberg, counsel to USW, 416-646-4304, firstname.lastname@example.org; Bob Gallagher, USW Communications, 416-544-5966, 416-434-2221, email@example.com