Steel Mills
Clarification of Chapter 15 Filing at Essar Steel Algoma
Written by Sandy Williams
July 21, 2014
Essar Steel Algoma would like to stress that it is has not filed for bankruptcy or commenced insolvency proceedings in Canada or the U.S. according to a clarification document received by SMU.
After reaching an agreement with its parent company for an infusion of cash, deleveraging of its balance sheet, and refinancing of its senior secured debt, Essar Steel Algoma filed a Plan of Arrangement under the Canadian Business Corporations Act (CBCA). A corresponding filing under Chapter 15 followed on July 17 in the United States. In a note to suppliers on July 18, CEO Kalyan Ghosh reiterated that a Chapter 15 filing is “simply a court proceeding to recognize what is happening in the CBCA process.”
“Specifically, the U.S. Chapter 15 filing is only necessary because Algoma’s funded debt was issued under U.S. laws; therefore the Chapter 15 cases are simply necessary for the U.S. court to recognize and give effect to the Canadian consensual restructuring of the Company’s bond debt in the Canadian proceedings,” wrote Ghosh.
Suppliers were advised that vendors will continue to be paid for all materials and services acquired before or after the filing. The restructuring of financial affairs will not impact the day to day operations of the company or impact supplier or trade obligations during the process.
Sandy Williams
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