A federal bankruptcy court judge has given bankrupt RG Steel, which voluntarily entered Chapter 11 reorganization just a few weeks ago, a little more time and access to more financing as it works toward improving its bankruptcy debt position in advance of auctioning a majority of its assets to satisfy a portion of those debts.
What may sound like a very small difference to some, could make all the difference for the steel company's operations and employees as new ownership is sought through a bidding process that now has a little more breathing room than it did at this time a day ago.
This slight improvement is something of a positive as it now loosens what had been called an unrealistically short timetable that was supposed to accommodate efforts to successfully mark company into new ownership.
It was welcome news to RG officials and employees who had been facing conditions for the bankruptcy sale of most of its assets that was being described as nothing short of "fire sale" conditions.
A number of the many objections filed with the federal bankruptcy court in advance of Thursday's omnibus hearing involved objections about how the coming auctions would treat things such as pension responsibilities as raised by the Pension Benefit Guaranty Corporation; properties onsite that are owned by other companies; and a number of concerns the Environmental Protection Agency has about current and future management and cleanups.
The company and committee negotiated extensions to deadlines required by the bankruptcy loan was to have terminated on July 27, but will now end on Aug. 10.
The auction process will proceed on a "dual track" and there is an "absolute drop-dead date" of Aug. 24 to complete a sale, said RG Steel attorney, Shaunna D. Jones.
Key dates in the auction process vary depending on whether the company can find a so-called stalking-horse bidder to set a financial starting point for the auction.
"Our guys are very pleased to have the sale time extended. Hopefully a buyer will step forward and production will resume at all RG facilities," said Jerry Conner, president of United Steelworkers Local 1223 in Yorkville
The decision from the court came as a result of a pivotal hearing held Thursday morning which the committee of unsecured creditors had been working to adjourn before it convened because of the extremely tight time frame and the unclear picture of numerous details which were driven by that reality.
In its earlier motion for adjournment of the Thursday hearing, the committee for the unsecured creditors had made it clear there were key points to be addressed as far as others in the process were conducting business to that point.
This was the type of positive movement the judge had hoped to see in place before the hearing Thursday.
"Ordinarily debtors and lenders in emergent sale cases understand the key and valuable role played by an official committee and therefore they grant a reasonable request for an adjournment; here, the players have been unwilling in the case of the lenders and unable in the case of the debtors - because of debtor in possession constraints -- to agree.
The committee therefore was forced to file this motion to adjourn to ask the court for more time, noted the court entry from Tuesday."
All offers to compete in the auction must be received by July 25.
The company has until July 30 to negotiate a stalking-horse agreement aimed at establishing a bidding floor, but if there is no agreement with an initial bidder, the company will hold an auction July 31, with a hearing to approve the sale on Aug. 7 or Aug. 8.
Otherwise, the auction will be held Aug. 21, with the sale-approval hearing set for Aug. 23.
Secured lenders, owed about $440 million, are providing the bankruptcy loan.
Their debt will be paid down as proceeds from inventory and accounts receivables come in.
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