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NEW YORK STATE ALLIANCE FOR RETIRED AMERICANS
Stephen Muscarella, President
NYS PEF Retirees
Email: sjmuskie@roadrunner.com

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Former Sparrows Point Owner Agrees To Pay Some Benefits Owed To Displaced Steelworkers

Billionaire Ira Rennert Settles Claims That Stem From The Bankruptcy And Closing Of Sparrows Point And Other Steel Mills

Published Friday, October 9, 2015
by Mark Reutter/baltimorebrew.com

(BALTIMORE) - Renco Group, who threw the sprawling Sparrows Point Steel Mill into bankruptcy in 2012, has agreed to pay $6 million in severance and Vacation Pay owed to 2,000 workers who lost their jobs.  The settlement, which also covers Displaced Workers in Warren, Ohio, and Wheeling, West Virginia, will result in about $1,400 of compensation per Employee before taxes.

The settlement originated from a lawsuit filed by the U.S. Pension Benefit Guaranty Corporation that accused Renco’s billionaire owner, Ira Rennert, of evading his pension obligations to Workers before his RG Steel Unit declared bankruptcy.

The United Steelworkers Union (USW) joined in a multi-party mediation process that began a year ago and was concluded last month by a universal settlement.

The agreement clears Rennert, Renco, Cerberus Capital Management, RG Steel and former officers and directors of the steel company from “any and all claims, obligations, suits, judgments, damages, losses, expenses, dues, sums of money, accounts, contracts, controversies, agreements, promises, demands, debts, rights, causes of action and liabilities of any and every character, kind and nature whatsoever.”

In return, Renco and Cerberus will contribute $14 million and insurers for former RG Steel executives $3.4 million, for a total of $17.4 million to be distributed to various parties: The largest sum will go to four high-priced law firms and several consultants who represented the plaintiffs and debtors. Together, they will receive $7.8 million, or 45%, of the proceeds; $6.3 million will be paid to the 4,200 Workers covered by the United Steelworkers’ basic Labor Agreement who lost their jobs in August 2012 when the company was sold to liquidators; and an additional $480,000 will go for medical claims by former Employees, and $1.8 million to the USW’s Health, Welfare and Pension Trust Funds.

A small residual amount will be set aside to handle tax withholdings.

If any funds remain after the taxes are paid, there will be a small sum to re-distribute.

The PBGC, which will receive nothing in the settlement, sued Renco for $97 million in 2013, claiming the company sold a 24% stake in RG Steel to Cerberus to escape the Steelmaker’s Pension Plans, which were underfunded by $70 million.

Rennert and Renco denied the charges, saying they got a cash infusion from Cerberus in order to keep the steel mills running.

Four months after the deal, RG Steel filed for Chapter 11 bankruptcy.

After attempts to sell RG to other steel companies failed, two Midwest scavenger firms, Hilco Industrial and Environmental Liability Transfer (ELT), stepped in to purchase the Sparrows Point and Warren mills.

Immediately, the new owners voided the USW Bargaining Agreement and cut off Health, Supplemental Unemployment and Life Insurance Benefits to all former RG Employees.

To Read the Rest of This Labor News Story, Go to: www.baltimorebrew.com/2015/10/05/former-sparrows-point-owner-agrees-to-pay-some-benefits-owed-to-displaced-steelworkers/

 

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