RG Steel Files Chapter Eleven
WHEELING – RG Steel LLC this morning filed for Chapter 11 bankruptcy protection, citing debts in excess of $1 billion. The filing, in federal bankruptcy court in Wilmington, Del., came just days after the company warned it might have to lay off more than 4,000 workers, including hundreds at Ohio Valley operations.
Chapter 11 bankruptcy proceedings allow a company to reorganize under court supervision and continue at least some operations. An alternative bankruptcy proceeding, Chapter 7, is used to liquidate a firm.
RG Steel, a unit of the Renco Group investment company in New York, bought the former Wheeling-Pittsburgh Steel mills from Severstal, a Russian company, in March 2011. Included in RG Steel’s holdings are the former Wheeling-Pittsburgh headquarters in downtown Wheeling, and mills in Brooke County, East Ohio, Warren, Ohio, and Sparrows Point, Md. RG Steel spent $1.2 billion on the acquisition, in the process becoming the fourth-largest flat rolled steel producer in the United States. Reportedly, Severstal is listed as RG Steel’s largest single creditor and is owed $36.5 million.
Calls to RG Steel and to United Steelworkers officials were not immediately returned this morning.
United Steelworkers officials were notified last week that RG Steel planned to idle the facilities and possibly lay off workers. In letters sent to employees under a requirement of federal law, the company revealed it was “actively pursuing a buyer of some or all of the company’s assets.”
Layoffs at the plants were scheduled to begin Monday. RG Steel had said in its letter to employees that, “Though we are hopeful that a buyer will be identified, a sale process under these circumstances is highly fraught with uncertainty. While that process is under way, we will be compelled to idle the (Ohio Valley operations) and to lay off all or virtually all Wheeling employees. Given the exigency and uncertainty of the situation, we do not know at this time whether the idling will be temporary or permanent.”