|June 5, 2012|
Previously published on May 31, 2012
Earlier today, WP Steel Venture LLC (“WP Steel”) and seven affiliates (the “Affiliated Debtors,” and, collectively with WP Steel, the “Debtors”) filed for Chapter 11 protection in the U.S. Bankruptcy Court for the District of Delaware. The Affiliated Debtors include: Metal Centers LLC, RG, Steel, LLC, RG Steel Railroad Holding, LLC, RG Steel Sparrows Point, LLC, RG Steel Warren, LLC, RG Steel Wheeling, LLC, and RG Steel Wheeling Steel Group, LLC.
The petition lists both assets and liabilities in excess of $1 billion and estimates the number of creditors to be in the 1,000 to 5,000 range. WP Steel has also filed a motion to jointly administer the Debtors’ cases [Docket No. 2], as well as a motion to extend the deadline to file schedules or provide required information [Docket No. 3]. The proposed claims agent is Kurtzman Carson Consultants LLC [Docket No. 5]. Judge Kevin J. Carey has been assigned to the case, which is being administered under case number 12-11661 (KJC).
As of the time of this posting, no first day affidavit has been filed.
UPDATE: Since the original blog was posted, WP Steel filed the Declaration of Richard D. Caruso in Support of Chapter 11 Petitions and First Day Pleadings (the “Declaration”) [Docket No. 11]. According to the Declaration, Mr. Caruso served as the Chief Financial Officer of the Debtors from March 31, 2011 to May 22, 2012 and is currently an employee of the Debtors. Each of the Debtors is a limited liability corporation organized under the laws of Delaware, though the Declaration states that they are headquartered in Sparrows Point, Maryland.
The Declaration provides that the Debtors comprise the fourth largest flat-rolled steel company in the United States, with capacity to produce 8.2 million tons of steel annually. Additionally, the Debtors own a 50% share of various non-debtor joint ventures, the two most significant of which are Mountain State Carbon, LLC (“MSC”) (a production facility for the coke used in the Debtors’ steel production process) and Ohio Coatings Company (“Ohio Coatings”) (a world-class tin plate company), according to Mr. Caruso.
Mr. Caruso goes on to state that the Debtors are “seeking the protection of chapter 11 of the Bankruptcy Code to provide breathing room to pursue a sale process and maximize the value of their estates, for the benefit of all estate beneficiaries.” The filing is the result of a combination of factors, including the peak pricing levels retained by the raw materials required to make steel even as steel prices rapidly declined, resulting in substantial liquidity problems for the Debtors in mid-2011, according to Mr. Caruso. Additionally, the Declaration states that the Debtors faced significant setbacks in connection with the re-commencement of one of their facilities and discovered previously undisclosed working capital shortfalls after they took over operations of other facilities.
Although the Debtors do not yet have a “stalking horse” bidder, they plan to file a motion to approve the sale of all or certain of their assets free and clear of liens, claims, interests, and encumbrances, as well as procedures for the submission of bids, today.