Staff, wire
WILMINGTON, Del. - A Delaware bankruptcy judge on Tuesday approved a request by failed steelmaker RG Steel to pay $767,000 under a retention program to keep about 20 key employees on the job through the end of the year as the company finishes liquidating its assets.
Judge Kevin Carey approved the retention plan following a hearing Tuesday, overruling an objection by United Steelworkers union attorneys, who said the payments were unjustified and amounted to a gift for employees who will soon be out of jobs anyway.
Four of the workers were from the Warren plant. According to federal court filings, those workers are Michael Brunner, Jason Klingensmith, Daniel O'Bruba and Margaret Thompson.
RG Steel had argued that the workers were essential to the company's wind-down and suggested that without the payments, they may leave early or focus on job searches rather than finishing up RG's business.
"These people in many ways are no different than the steelworkers," said RG attorney Brian O'Connor.
O'Connor told Carey that most of the employees are in accounting and finance posts, with salaries ranging from $40,000 to $177,000.
United Steelworkers opposed the move.
Privately held RG Steel is the nation's fourth-largest flat-rolled steel manufacturer. It sought bankruptcy protection in late May, citing liquidity issues attributed to low steel prices and high raw material costs. The bankruptcy filing came a week after RG announced that it would idle factories in Maryland, West Virginia and Ohio and lay off thousands of workers.
More than 1,000 workers remain on layoff from the Pine Avenue, Warren, plant which has been sold to BDM Warren Steel Holdings LLC. The new owners are in the process of winterizing the plant while they are in the process of seeking a new operator to take it over.
Since the bankruptcy filing, RG Steel has been working to sell off assets in order to satisfy secured lenders who are owed some $450 million and have liens on virtually all of the company's assets.
"They felt that these employees were necessary to allow them to efficiently wind down the business and maximize assets for everyone concerned," O'Connor told Carey.
David Jury, an attorney for the steelworkers union, said the payments were unjustified, particularly when RG Steel's board approved the retention plan even as the company was negotiating a modified labor agreement with the union that included termination of health care benefits for covered workers and retirees. The company never told the union about the retention plan during those negotiations, he added.
"We can't think of any other way to describe it but as a gift... We think it's a grossly unreasonable exercise of the debtors' business judgment," said Jury, who told Carey that denying RG's request would send a message to companies in bankruptcy about "a basic notion of fairness."