Steel Products
RG Steel Creditors Hope to Sue Renco Group Founder for $238 million
Written by Sandy Williams
January 21, 2013
Written by: Sandy Williams
Creditors of bankrupt RG Steel are seeking court permission to sue Renco Group founder and billionaire Ira Rennert for deliberately delaying the bankruptcy filing of RG Steel in order to protect his own financial interests.
RG Steel and its affiliates are 75 percent-owned by Renco, with the remaining equity owned by Cerberus RG Investor LLC. According to court documents, Rennert persuaded Cerberus to provide $215 million in financing in exchange for 24.5 percent of Renco’s interest in RG Steel. A deal the Official Committee of Unsecured Creditors alleges Rennert made in an attempt to avoid potential liability for RG Steel’s underfunded pension plan. The transaction, however, did not alleviate the financial crisis facing the steelmaker and the delay and additional debt, taken on by RG Steel under Rennert’s direction, led to a reduced value in RG Steel’s coke-supplying joint venture.
Court documents filed by the attorney for the committee alleged that Rennert was responsible for saddling RG Steel with hundreds of millions of additional debt that the company would be unable to repay.
“Rather than take the obvious course and file for bankruptcy protection, as advised by counsel, which would have been in the best interests of the Debtors and allowed for an orderly liquidation and sale of the Debtors’ assets,” said court papers filed by the committees attorney, “Rennert chose to layer on more debt with no real hopes of solving the Debtors’ financial problems but only of potentially avoiding his own underfunded pension liability.”
The committee hopes to recover $238 million from Rennert but needs authority to pursue litigation because it does not believe RG Steel will pursue the case on its own since the claims are against its sole equity owner and controlling manager.

Sandy Williams
Read more from Sandy WilliamsLatest in Steel Products

SMU Week in Review: September 1-5
Here are highlights of what’s happened this past week and a few upcoming things to keep an eye on.

HR Futures: Market finds footing on supply-side mechanics
As Labor Day marks the transition into fall, the steel market enters September with a similar sense of change. Supply-side fundamentals are beginning to show signs of restraint: imports are limited, outages loom, and production is capped, setting the stage for a market that feels steady on the surface but still unsettled underneath.

Beige Book: US markets remain cautious amidst volatile pricing environment
Sluggish economic activity across the US was largely attributed to uncertainty caused by tariff policies and growing cost pressures, according to the US Federal Reserve’s (The Fed) latest Beige Book report. The Fed’s latest economic report, posted on Sept. 3, consists of economic findings from the six weeks preceding Aug. 25 throughout 12 districts. Economic […]

Rig count dips again in both US and Canada
Oil and gas drilling activity waned in the US and Canada this past week. Ticking own for the second straight week in both regions.

Steel caucus pushes US trade officials to maintain strong S232 program
The bipartisan Congressional Steel Caucus is pushing for US officials to maintain a robust Section 232 program as they negotiate trade deals with America's trading partners.