Steel official targeted in court motion

The New York-based billionaire at the helm of the now bankrupt and defunct RG Steel is named as the central figure in a motion filed late Thursday in federal bankruptcy court in Delaware, asking approval of a motion for an order, “granting leave, standing, and authority to commence, prosecute and settle certain claims on behalf of the debtors’ estates against Ira L. Rennert as manager of the debtors.”

The foundation of the motion: allegations Rennert committed “breaches of fiduciary duties.”

“The committee believes that prosecuting the Rennert Claims would be appropriate and may provide recoveries in excess of $238 million for the Debtors’ estates and creditors.”

“The committee believes that the Debtors will not pursue the Rennert Claims because such claims are against the Debtor’s sole equity owner and controlling manager. Further, this conflict of interest compromises the Debtors’ ability to pursue such meritorious claims in an effective manner.

“As such unless the committee is granted standing to pursue the Rennert claims, these valuable claims will not be prosecuted and any potential benefit there from will be lost. It is therefore crucial that the committee be granted standing to pursue the Rennert Claims on the Debtor’s behalf.”

The entry goes on to state the “Rennert Claims are plausible, and may generate significant value for the Debtors’ estates and produce a substantial source of recovery for the unsecured creditors.

“Second, the debtors are ill-suited, and apparently unwilling, to prosecute the Rennert Claims given the inherent conflict of interest created by the nature of such claims.”

The filing of the motion was entered into the federal bankruptcy court’s docket well after the other entries for the day had been posted on the publicly available site which has been providing access to the case’s docket entries since the federal bankruptcy case began in May 2012.

A footnote to the entry identifies the document as a complaint that “is a work-in-progress subject to further revisions, including with respect to the Committee’s choice of jurisdiction where the complaint is going to be prosecuted.”

Objections to the motion must be filed by 4 p.m. on Jan. 31, 2013.

A hearing on the matter has been initially scheduled for 1:30 p.m., Feb. 14, 2013 in the Delaware court.

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