November 26, 2001 (PLANSPONSOR.com) - LTV Steel has petitioned a federal bankruptcy court for permission to reject its labor agreements and cease operations, claiming it lacks sufficient funds to continue operations.
The motions, which could cost 7,600 workers their jobs, were filed last week in the US Bankruptcy Court for the Northern District of Ohio.
The United Steelworkers, which was in the middle of negotiations with LTV’s creditors (see Benefit Programs Play A Role in LTV, Union Agreement), termed the timing of the announcement “reckless and irresponsible,” according to the Associated Press.
Members of the Steelworkers union ratified a four and one-half year modified labor contract with LTV in August (see Union Approves LTV Deal, Keeps Benefits) designed to keep the nation’s third largest steelmaker from going out of business. Cleveland-based LTV had proposed cutting pensions and eliminating retiree medical benefits as part of a program to save $800 million a year (See LTV Proposes Cutting Pensions, Retiree Benefits). LTV filed for bankruptcy protection last December.
However, that agreement was contingent on LTV securing a $250 million loan under the Federal Emergency Steel Loan Guarantee Program as well as approval by the Pension Benefit Guaranty Corporation for a new pension funding schedule that would allow LTV to temporarily reduce its annual obligations between 2001 and 2007 to a level that could be supported by the company’s future cash flow.
Additionally, retirees would have been required to pay a greater share of the costs of health care insurance under the restructured plan.
According to the report, USW was informed of the restructuring plan and, after meetings with the company to discuss the issues, last week the union made an offer that would let the company out of some of its obligations under the restructuring plan, allowing the company to obtain the loan.
However, USW said LTV had not seen the most recent proposal made to the creditors committee before they took action to shut down.