Bankrupt RG Steel plans to spend at least $770,000 across 21 people identified in a proposed "key employee retention plan" if the federal bankruptcy court allows its implementation and use through year's end.
The period is being called a "wind-down phase." Attorneys for RG filed the motion late last week requesting approval of the plan and its activation.
The court-appointed reorganization officer helped design the proposal and is asking the court for its approval, according to the filing.
The requested funds would be paid to the individuals to allow them to purchase health care coverage previously paid for as a benefit of employment with RG Steel, which has been discontinued as a direct result of its bankruptcy reorganization.
The motion will come before the federal bankruptcy court at a hearing scheduled for Nov. 20.
United Steelworkers updated members via email describing the proposal as "inappropriate, unfair and outrageous."
"Specifically the company wants to pay a $2,000 monthly stipend for each individual to allow them to purchase health insurance, along with bonus payments of three months' salary if the individual stays through Dec. 31," said the USW communication of RG's motion.
The names of the selected individuals were not publicly released through general access to the filing, though it identified the "essential functions" these employees perform as sales, accounting, treasury, IT and other responsibilities.
"The USW fully intends to make the bankruptcy court aware of our objections to this cash grab. There will be a hearing in Delaware on Tuesday, Nov. 20, and our legal counsel will be present," union officials said in an email to their membership.
Absent adoption of the plan, RG's motion alleges that, "at best," those same employees would be "less motivated to undertake the substantial responsibilities they have been asked to undertake in connection with the wind-down process, and at worst, would leave the debtors' employment entirely," and "would hinder the debtor' ability to realize the full value of their remaining assets.''
In the 28-page motion was a reference to what debts had been satisfied to date through funds raised by asset sales, which included selling steel manufacturing and related resources from Warren's plant through the Ohio Valley and east to Sparrows Point, Md.
Proceeds from RG having sold its primary steel-making facilities and assets during the initial four months of the bankruptcy reorganization cases were used to "pay down their senior secured pre-petition and post-petition debt in full," according to the motion filing.
The court document also states the plan's adoption would be expected to have a positive impact on the "morale" of the 21 people and is designed to ensure that they remain committed.
Kim Loccisano is a reporter for the (Martins Ferry) Times Leader.