CLEVELAND LTV is sending bills, not checks

One former supplier likened LTV's move to extortion.
CLEVELAND (AP) -- The liquidating LTV Corp. owes millions of dollars to suppliers and contractors -- but instead of paying, LTV is mailing bills.
Using a provision of bankruptcy laws, LTV sent letters this month to an undisclosed number of companies, demanding refunds on payments LTV made up to 90 days before it filed for bankruptcy protection on Dec. 29, 2000, The Plain Dealer reported.
For example, LTV owes RAK Corrosion Control Inc. $100,000 for fixing pipes in its iron-making furnaces and coke ovens. But as an unsecured creditor, the Amherst company probably won't receive payment.
Instead, LTV demanded the return of more than $200,000 it paid RAK in late 2000 -- but said it would accept about half the amount if RAK pays by the end of the month. Otherwise, the letter said, LTV is prepared to sue.
"My attorney told me there's a possibility I'll have to pay," RAK owner Guy Reph said. "This could bankrupt us."
What the law says
U.S. Bankruptcy Code allows companies to recover payments made to outside suppliers in the 90 days before its bankruptcy filing if those payments are found to be "preferential," such as paying ahead of schedule or more than the amount owed.
The provision is meant to prevent a business that expects to file bankruptcy from showing favoritism to some suppliers, and to keep suppliers from demanding concessions from a troubled company.
The suppliers are questioning LTV's method, not the legality of the requests.
William Calfee, an executive vice president for Cleveland-Cliffs Inc. and head of LTV's creditors committee, accused LTV of targeting all suppliers, rather than just those that may have received preferential treatment.
"This is tantamount to extortion," he said. "Instead of really trying to research who might be guilty and who it might apply to, they blasted everybody and did it in a way that's very threatening."
LTV spokesman Frank Filipovitz, one of about 20 people left at the company, said its policy is not to comment on matters "that could end up in potential litigation."
Any lawsuits must come before Dec. 29, because the statute of limitations on collecting the refunds expires two years after the bankruptcy filing.
Company history
LTV stopped paying unsecured creditors in late 2001. In November, it asked a bankruptcy judge for permission to liquidate assets.
LTV's steel mills and most other assets were sold in February to WL Ross & amp; Co. LLC, a a privately held investment group, for $127 million plus about $200 million in environmental and other liabilities.