Jilted Suppliers Question LTV Steel
Jul. 07, 2002
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CLEVELAND (AP) _ Some of LTV Steel's former suppliers _ from mom-and-pop shops to corporate conglomerates _ believe they were misled about the company's ability to pay bills during parent LTV Corp.'s bankruptcy.
More than $125 million for goods and services remain owed for billings after LTV asked for Chapter 11 bankruptcy protection 18 months ago, The Plain Dealer reported Sunday.
Suppliers' pending court battles are expected to include promises made by purchasing managers, a letter the Cleveland steelmaker sent to its suppliers and copies of purchase orders issued on LTV letterheads.
Maintenance contractor Hunter Corp., a 95-year-old company, was forced to start liquidating this spring when LTV failed to pay a tab approaching $3 million for the repair of a caster at the LTV Steel mill in Indiana.
``They did not deal truthfully with people,'' said Joel Sprayregen, Hunter's lawyer.
The Portage, Ind.-based company had verbal assurances from a midlevel LTV Steel executive that money was set aside for needed repair work, said Ken Selman, Hunter's executive vice president.
LTV said it simply ran out of money. In court papers filed in December, the company said it was in ``economic and financial checkmate'' when it failed to land a new loan and existing lenders tightened the purse strings.
A message seeking comment was left Sunday at LTV.
The head of LTV's unsecured creditors committee and the U.S. trustee assigned to monitor the bankruptcy case said suppliers should have known the risks.
``There were signals being sent that LTV was thinking about shutting, and there was increasing concern about whether or not they would be able to pay all their bills,'' said William Calfee, an executive vice president of iron ore company Cleveland-Cliffs Inc. and chairman of the creditors committee. ``Those were warning signals that perhaps people should have been more alert to.''
U.S. Trustee Ira Bodenstein said vendors had to judge the risk.
``Sometimes you just have to look at it seriously and say, `Is it worth doing business with this company?''' Bodenstein said. ``The vendor has some responsibility.''
Jilted suppliers point to a judge's order signed Dec. 29, 2000, the same day LTV filed for Chapter 11 protection. The order gave LTV permission to pay suppliers necessary for its continued operation.
LTV followed up a few days later with a letter that said, ``As a valued supplier of LTV Steel, you should be aware that the Bankruptcy Code provides a priority status for goods and services received on and after the date of the Chapter 11 filing. We intend to pay for these goods and services in full.''
For part of 2001, suppliers were paid in full, The Plain Dealer said. According to court documents, most of the unpaid invoices are from the weeks leading to Nov. 20, the date LTV asked a bankruptcy judge for permission to liquidate assets.
Money by then was set aside to pay lawyers, consultants and LTV executives. No money was held back for bills owed to suppliers.
On Feb. 28, U.S. Bankruptcy Judge William Bodoh approved WL Ross & Co. LLC's purchase of most LTV steel assets for $127 million, plus the unspecified cost of assuming environmental liabilities. The New York-based investment firm created International Steel Group Inc. from flat rolled steel plants located in Cleveland, East Chicago, Ind., and Hennepin, Ill., and a coke plant in Warren, Ohio.