Judge shuts down U.S. Steel request to shorten bankruptcy protection
The Pittsburgh-based former parent company had asked the judge to reconsider U.S. Steel Canada's protection
A judge Friday shut down a move by the Pittsburgh-based U.S. Steel that opponents considered a ploy to hurt a competitor, U.S. Steel Canada.
U.S. Steel was asking Ontario Superior Court Judge Herman Wilton-Siegel not to grant an extension of the Canadian company's bankruptcy protection. And if he did extend it, to bring it up for reevaluation near the end of May instead of the end of July.
Wilton-Siegel rejected that and granted the extension through the end of July. U.S. Steel Canada is in the middle of a sale process, and the second phase of bids from interested would-be buyers has a deadline of Friday.
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The move from U.S. Steel, the parent, invoked the "L" word — liquidation. The company argued that if the bids coming in on a sale aren't higher than how much could be divvied up if the Canadian company liquidated, that extending the bankruptcy protection until July would be "to the detriment of U.S. Steel."
"USS is very concerned about USSC's continuing losses... and the impact of these losses on USSC's liquidation value," the company said in a court filing.
But opponents including Alan Mark, an attorney representing the province, told the judge the bid was a ploy to hurt the chances of U.S. Steel Canada, now a direct competitor with the American parent.
'Secret deal'
Also Friday, the judge heard an argument from attorneys for the unionized steelworkers, the city of Hamilton and attorneys for the salaried steelworkers that they be allowed to see the so-called "secret deal."
That refers to the terms of the settlement that persuaded the federal government to drop its lawsuit against U.S. Steel after it moved steel production out of Canada and broke promises made when it acquired Stelco in 2007.
The judge did not release his decision yet. The argument that the attorneys be allowed to see the deal's terms on a "for-counsels-eyes" basis comes ahead of a hearing that will decide whether the deal should be released to the public.
The process is the last likely avenue for the deal to be revealed publicly.
The Liberal government says it won't unilaterally open that settlement, but would support U.S. Steel, or the judge overseeing the company's bankruptcy protection proceeding, deciding to do so.