RG Steel files for bankruptcy protection

Staff report

Sparrows point, Md.

A week after announcing plans to idle its Warren plant and two others this month, RG Steel has filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in Delaware.

RG Steel was formed in March 2011 after the purchase of three steel facilities in Sparrows Point, Md., Wheeling, W.Va., and Warren.

“Despite the company’s aggressive cost-reduction efforts, significant improvements in its cost structure and substantial investment capital, the company has been unable to overcome the impact of the continued deterioration of the market and the inability of the industry to sustain a meaningful recovery,” John Goodwin, company CEO, said in a statement Thursday.

Last week, the company issued a notice to the United Steelworkers saying it was facing “an immediate, unexpected liquidity crisis.” The company’s statement said it was trying to work out an agreement with creditors to secure funds to cover the costs of continuing operations.

At that time, a company spokeswoman said the shutdown was long-term but not permanent.

RG Steel’s notification to workers was issued under the federal Worker Adjustment and Retraining Notification Act, which requires companies to give a minimum of 60 days’ notice prior to shutdown.

But it gave only a 14-day notice before the anticipated layoff of Warren workers.

The Thursday statement said the Chapter 11 filing was the “most prudent and effective means” of maximizing the value of the business.

“By voluntarily filing for Chapter 11, we will have the opportunity to use the court-supervised process to implement an orderly asset-preservation plan and explore other options, including soliciting offers to purchase all or certain of the company’s assets,” the CEO said in the statement. “We have already begun a sales process aimed at maximizing value for all stakeholders and preserving the jobs created when RG Steel acquired these facilities.”

As part of the bankruptcy filing, the company has filed requests with the court to make wage and salary payments and continue other employee- related programs.

The Warren plant employs about 1,020 people.