Steel Mills
USW Challenging US Steel Claim it is Owed $2 Billion by USS Canada
Written by Sandy Williams
April 14, 2015
The United Steelworkers are challenging US Steel’s claim that it is owed more than $2 billion from its own subsidiary, US Steel Canada. Union workers are concerned that US Steel will give itself creditor preference over the pensions of USW workers at Lake Erie Works and Hamilton Works.
“Basically U.S. Steel says it owes itself and will take care of itself before fulfilling its legal obligations to its retirees,” said USW Ontario Director Marty Warren.
“We will do everything we can to defend the interests of our members and pensioners and ensure that U.S. Steel is held to its obligations,” Warren said.
Gary Howe, incoming president of USW Local 1005 at Hamilton Works, said “It’s shameful that U.S. Steel, which created this situation in the first place, wants to trample over seniors and see these pensioners worry about losing part of their incomes.”
Bill Ferguson, USW Local 8782 president representing Lake Erie Works, rejects the credibility of US Steel’s claims, saying “U.S. Steel’s claims should have to be proven in court, like any other claim.”
The USW is asking the court to “recognize that “U.S. Steel, as the sole owner and shareholder of U.S. Steel Canada, exercised complete control over USSC and its board of directors at all material times.
“USS, by virtue of its control of USSC, has directed USSC’s operations in a way which has caused it to significantly underperform, requiring it to incur significant debts, and diluted the Beneficiaries’ and the Union’s recoveries in this proceeding,” said the union in its Tuesday press release.
“USS’s secured claim is based on security interests effectively granted by USS to itself, at a time when there was no independent board of directors or advisors, for insufficient consideration and in a manner which amounted to an improper preference and/or fraudulent conveyance,” said the USW in its court filing. “A significant portion of US Steel debt is in the nature of equity and should be re-characterized as such,” added the union.
“After directly undermining its own operations in Canada, it is bordering on the absurd for U.S. Steel to demand that it go to the front of the line, so that it can pay itself first and then leave pensioners, workers and their families in the lurch,” said Ken Neumann, United Steelworkers National Director.
US Steel Canada employees and retirees and the City of Hamilton are also requesting that the Ontario Superior Court reveal the terms of a secret settlement made between the federal government and US Steel when the company failed to uphold commitments promised when it took over Stelco facilities in 2007.
Details of the agreement were released to the CCAA monitor but not to the union or public. The USW, salaried employees and city say the terms in the agreement are relevant to the restructuring of US Steel Canada and should be made available to those individuals who will be impacted by any decisions, especially in regard to the company’s pension plans. As of Dec 31, 2013 the US Canada pension plan had a deficit of $837.7 million.
Sandy Williams
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