CSC STEEL Creditors say fight is over, it's time to liquidate
The creditors say their attorneys have been working without pay since early March.
By CYNTHIA VINARSKY
VINDICATOR BUSINESS WRITER
YOUNGSTOWN -- A committee of CSC Ltd. creditors says it's time to give up on the troubled Warren steel mill.
The unsecured creditors committee, made up of several large companies that were owed substantial sums when CSC filed for Chapter 11 bankruptcy protection in January, is asking the U.S. Bankruptcy Court here to convert the steelmaker's case to Chapter 7.
Chapter 11 allows companies to continue operating while managers negotiate a financial restructuring. A Chapter 7 filing calls for a company to be liquidated and the proceeds distributed to its creditors.
In a motion filed by Atty. Mark Hebbeln, a Chicago attorney, the creditors wrote that CSC "has not indicated, nor does it appear to have the ability, to propose a viable plan of reorganization."
The motion also notes that CSC has been unsuccessful in attempts to find a buyer, even with the help of McDonald Investments, which was hired to help with the sale months before CSC sought bankruptcy protection in January.
The steel bar maker shut down operations April 13, leaving about 1,300 employees jobless.
"Given the lack of interest in the debtor's assets on a going concern basis, it has become abundantly apparent that a piecemeal liquidation of the debtor's assets is contemplated and perhaps inevitable," the motion states.
An auction scheduled earlier this month was canceled due to a lack of interested bidders, although one Ellwood City, Pa., firm, Ellwood Group Inc., has offered $2.5 million for CSC's thermal treatment and finishing operations.
The creditors include Bank One, which serves as trustee; First Energy; The Copperweld Litigation Trust; Billiton Stratcor Inc.; International Mill Services; United Steelworkers of America; Copperweld Retirees Voluntary Employee Benefits Association; Bethlehem Steel Corp.; and Atlas America.
Complaint: In a separate motion, the creditors committee also asks the court to dissolve its committee and complains that CSC lenders have refused to allow the creditors' attorneys and financial advisers to be paid.
For that reason, it states, the Chicago law firm of Gardner, Carton & amp; Douglas and American Express Tax and Business Services have served the committee for months without compensation.
Creditors also have been denied a request to be included in the process of liquidating CSC's assets, the motion says, and have been denied documents requested of CSC attorneys.
The motion states that CSC's lending banks objected when the creditors committee asked for a $50,000 retainer for its attorneys, and that the court denied the payment three months later, giving the lenders exclusive control over how CSC's cash collateral is spent.
Lenders have continued "on a monthly basis" to object to use of the cash collateral to pay the creditors' attorney and financial advisers, the motion states.
The motion adds that committee members and professionals should not be required to spend time and money in "doomed attempts" to play a constructive role.
No hearing date: Atty. Jeff Baddeley, representing CSC, could not be reached for comment. Atty. James Ehrman, representing the lenders, was also unavailable. A hearing date has not yet been set for the creditor's committee motions.
Judge William Bodoh was to consider authorizing payment of fees later today for CSC's law firm, Baker & amp; Hostetler of Cleveland, as well as for Gardner, Carton & amp; Douglas and American Express.