A step too far: U.S. Steel files motion to steal $2.2 billion from Canada

(November 5) – U.S. Steel executives are flush with arrogance for having manipulated the Ontario Superior Court to put its wholly owned Canadian subsidiary into bankruptcy protection of the Companies’ Creditors Arrangement Act (CCAA) without putting U.S. Steel assets in the U.S. at risk. This was done with the criminal magician’s sleight of hand, creating a fictitious separate Canadian company, an offspring that has supposedly bled the good U.S. parent dry.

The illegitimate offspring, which has been systematically abused since being seized by U.S. Steel and is now kicked out of the house, cannot pay for anything and has had most of its customers stolen by the abusive parent. In court, U.S. Steel said the offspring, this fictitious entity, which supposedly cannot meet its responsibilities to the older generation and its neighbours, this illegal offspring reduced to bare bones with its customers stolen by the parent, must be forced to liquidate itself and use the proceeds to pay the abusive parent $2.2 billion.

U.S. Steel wants Canadian authorities to justify what cannot be justified, a $2.2 billion U.S. Steel claim on itself by itself using proceeds from the liquidation of its Canadian subsidiary while leaving out to dry steelworkers, salaried workers, retirees, the Canadian economy and public interest.

Meanwhile, the Liberal Party which has formed the new federal government has not even seen fit to empower a Ministry of Industry. Other than claiming to prioritize scientific research instead of industrial development, the new government’s emphasis is all about privatization of insurance schemes and pensions and paying the rich through public-private partnerships and the like. Not a good omen for steel and other industrial workers whose jobs and pensions are under attack. They clearly do not form the much touted “middle class.”

This shows once again that it is the workers who must hold the wild irresponsible U.S. parent to account. U.S. Steel says its abused foster child must pay the abusive foster parent $2.2 billion for having been reduced to something that cannot produce value, cannot employ workers, cannot meet its economic responsibilities to the Canadian economy, and cannot meet its social responsibilities to those who built Stelco and those in the community who depend on it. What a farce! The tables must be turned and the abusive parent U.S. Steel put in the dock, dragged before the public and forced to settle accounts for its criminal actions.

U.S. Steel’s step too far should be its last in Canada aside from settling accounts with the people and country it has abused. The time is now for a pro-social solution to put the situation right!

The CCAA court will hear the motion on November 20, in Toronto to set a date for the hearing to commence.

Reading U.S. Steel’s criminal notice of motion

Notice of motion of United States Steel Corporation to set dates for a claims trial against the people

U.S. Steel (USS) is pursuing the fiction of its $2 billion purchase of Stelco in 2007, as magically turning into a debt owed to itself by the steel facilities and their present and retired workforce. This comes despite its own well-known deliberate actions to wreck production of value and reduce employment at Stelco in violation of the Investment Canada Act for which the federal government launched a lawsuit against it. The losses at Stelco subsequent to U.S. Steel’s seizure of it have been predictable and self-inflicted for whatever narrow private interests USS has been pursuing. Now, the predator wants to inflict more pain on the Canadian victims of its deliberate actions with a Notice of Motion to squeeze yet more blood from those it has abused. It must not pass!

The salient points of its Notice of Motion are here reviewed with all quotations coming from the document USS has submitted to the Ontario Superior Court (Commercial List).

“The USS Claims, as amended, total over C$2.2 billion: C$1,987.7 in unsecured claims and C$213.4 million in non-contingent and contingent secured claims.”

USS asserts that its claim is not one of whatever equity remains after other creditors have received their claims, which is normally the case in bankruptcy. It demands the right to leap its equity in Stelco ahead of creditors, including the pension funds, retirees’ post-retirement benefits, the Ontario government loan, suppliers, contractors and others.

USS attempts to assert its equity claim as the owner of a debt to itself, the parent U.S. company, by its Canadian offspring, of which the parent is the sole owner. U.S. Steel is the recognized undisputed owner of the equity in the former Stelco facilities, and is responsible for all its regrettable actions and losses, and claims against it. Putting its offspring in bankruptcy protection of the Companies’ Creditors Arrangement Act(CCAA) and now this Notice of Motion to claim debts to itself by itself are desperate attempts to avoid the self-inflicted pain it has caused. The pain is being felt not just by its owners of equity, its shareholders, but most importantly by all those who have a direct stake in the health and viability of Stelco as a going concern producing value for the Canadian economy and people. Canadians want a just settlement of this case. They want U.S. Steel held to account for its crimes and to bring into being a new direction for Stelco within a pro-social agenda for nation-building.

The creditors and stakeholders in Stelco object to USS and its misrepresentation of its equity as a debt to itself by itself. The CCAA process and Notice of Motion are pure storytelling in favour of monopoly right and should have no place within any part of the legal system. All money USS paid to buy the facilities and subsequently run them into the ground represent equity, if any is left after creditors have been paid and all stakeholders including retirees have had their claims met in full.

“Pursuant to the Claims Process Order:

(a) ‘the Monitor shall prepare a report to be served on the Service List and filed with the Court for the Court to consider, detailing its review of all USS Claims and recommendations it has, if any with respect to the determination of such Claims;”

USS handpicked the Monitor, the executives and directors of its Canadian offspring, which it calls U.S. Steel Canada (USSC), and all central actors within the CCAA process, except the Judge and those who have filed objections to the entire process and the claims of USS. The Monitor and others who play crucial roles within the CCAA process serve the private interests of USS or their own private interests in opposition to the genuine Stelco claimants and stakeholders. The control of the process by powerful representatives of the rich is a critical aspect of CCAA, which in effect represents the privatization of the justice system. The Monitor prepares all reports to the court and those reports form much of the basis for the rulings of the Judge. The reports are treated as evidence of the correctness of U.S. Steel’s storytelling.

“On or around March 8, 2015, the Monitor delivered its Seventh Report in which it recommended to this Honourable Court that:

“(a) USS bring a motion to approved [sic] the USS Claims; and

“(b) a schedule be set for an early hearing of USS’s motion, including a timetable for USS’s motion, for any objections to the USS Claims and for the filing of any other materials in connection with USS’s motion and any challenge thereto.

“8. On or around March 13, 2015, USS brought a motion seeking court approval of the USS Claims as Proven Claims pursuant to the Claims Process Order.”

The Monitor has set the dye. His report presents USS as a creditor that is owed money to itself by itself. The money owed is not a claim of simple equity but one of debt to itself. The only issue according to the Monitor is to sort out the priority of the debt owed to USS by itself.

“9. On or around April 14, 2015, the Objecting Parties filed Notices of Objection relating to the approval of the USS Claims.”

The Objectors are reduced to disputing the USS claims and the Monitor’s report, which supports those claims. The essence of the Monitor’s report puts USS as an owner of debts owed by its own company, with those debts payable to itself by itself. The USS claim is not one of simple ownership of equity in its own property. USS contends one part of its empire is in need of bankruptcy protection caused by its deliberate wrecking of Stelco’s capacity to produce value. The one part of its empire put into bankruptcy protection must liquidate its assets and turn the proceeds over to the empire leaving all legitimate claimants with whatever is left.

“13. On or around August 14, 2015, this Honourable Court issued an endorsement setting out a schedule in respect of the filing of evidence, expert reports, read-ins and written arguments relating to the USS Claims hearing (the ‘USS Claims Trial‘) which was scheduled to commence on September 16, 2015.”

There we have it; the step too far is taken. USS has successfully reduced the CCAA process to a “USS Claims Trial.” The trial will determine the priority of the USS claims, not their validity in the first place, which the report of the Monitor never put in doubt. The fraud is almost complete and USS insists the CCAA process should tolerate no further delays to judging the priority of its claims on itself by itself.

Stelco veterans and their allies will recognize a similar pattern to the CCAA process of 2004-06. In that case, the CCAA plotters made the owners of equity, which included many from the Hamilton region, the target. The Monitor and others including importantly the Debtor-In-Possession Brookfield Capital Partners and the Stelco CEO Rodney Mott, who was parachuted in to create the conditions for the U.S. Steel takeover, manipulated the CCAA process in such a way to extinguish the claims of the owners of existing Stelco equity and seize control of the company and its value. After gaining control, they took Stelco out of the CCAA fraud and sold the company they now owned to U.S. Steel in 2007 for a big score.

However, because of the staunch resistance of Local 1005 USW and others through their principled and consistent refusal to participate in the CCAA farce and their appeal to the court of public opinion, the criminal manipulators were not successful in extinguishing the pension funds. They were forced into an agreement with the Ontario government to make the pension funds whole by the end of 2015, a social responsibility U.S. Steel accepted legally and publicly when it purchased Stelco from the CCAA co-conspirators in 2007 but which it now rejects and wants to run away from through this CCAA fraud.

“26. Now that the mediation has been completed and USSC’s business continuity motions have been resolved, there is no legitimate basis for further delaying the USS Claims Trial.

“27. The Objecting Parties should not be entitled to oppose the approval of the USS Claims and then prevent the USS Claims from being determined on the merits on a timely basis;”

So there we have it in black and white, the step too far to make legitimate the illegitimate claim of USS that it owns a debt in its offspring and demands that the debt be paid to itself by itself through liquidating Stelco’s assets and using the proceeds to pay itself.

Canadians are shocked by the arrogance of U.S. Steel and demand a pro-social alternative to this CCAA farce. The people do not want Stelco liquidated and they do not want U.S. Steel getting off scot free from the crimes it has committed in Canada. The people demand that both the federal and Ontario governments intervene to defend public right and deprive U.S. Steel of its monopoly right to manipulate Canada’s justice system in this outrageous manner. Stelco is not bankrupt! U.S. Steel is morally and otherwise bankrupt! It must be held to account for its crimes against the people!

A pro-social plan for Stelco exists! Let’s put it into action!

(Full Notice of Motion available here.)Return to top

Suggestions for a pro-social alternative for Stelco

Suggestions for a pro-social alternative for Stelco follow. The CCAA process is completely subservient to the private interests, monopoly right and pragmatism of those in control. This CCAA justice is no justice at all. It is arbitrary, directly serves monopoly right and has no place in modern Canada. Both the Ontario and federal governments should intervene immediately, put an end to this farce, take control of the situation and implement a plan to make Stelco a public going concern that favours the people, upholds public right and the rights of all, and meets all its social responsibilities to the people, economy and nation-building.

To see justice done

Extract from “Unite to Stop U.S. Steel’s Attack on Canadians, Their Public Right and Nation-Building!” Renewal Update, October 11, 2015 – No. 188.

To see justice done, Stelco should be removed immediately from the bankruptcy court and placed in the hands of a public trustee under the authority of the Ontario government. No debtor-in-possession funds from the Brookfield Capital vultures should be used and all lenders charges should cease. The bankruptcy monitor and all others given standing in the CCAA proceeding should be relieved of their duties without rights to further drain Stelco of revenue.

A government order should be issued relieving U.S. Steel of all rights to sell steel in Canada until it has fully met its obligations to Stelco employees for their pensions and benefits and paid restitution for the damage it has inflicted on the Canadian economy. U.S. Steel must hand over the Stelco order book and immediately cease filling any orders from its U.S. plants. The public trustee should continue all Stelco steel production and filling of orders and vigorously pursue new orders. Revenue from production should go towards renewing production in Hamilton and Lake Erie Works, fully meeting the claims for post-retirement benefits and pensions, paying municipal taxes and local supplier and contractor claims against U.S. Steel, and dealing with environmental concerns.

All U.S. Steel claims against Stelco should be dismissed with contempt. The Ontario and federal governments should launch civil suits against U.S. Steel for breach of contracts under theInvestment Canada Act and the pension and other agreements entered into at the time of Stelco’s purchase in 2007. U.S. Steel must be ordered to use its U.S. assets to meet its obligations in Canada.

The governments should also set up a public inquiry into possible wrongdoing including insider fraud and theft surrounding the seizure of Stelco from its equity owners while under bankruptcy protection in 2004-06 and its subsequent sale to U.S. Steel in 2007. All possible means should be employed to regain the approximately $2 billion lost to vultures, including the current Debtor-In-Possession Brookfield Capital Partners, which has come back to the scene of the crime for yet more spoils.

The rights of Canadian workers are inviolable. U.S. Steel’s trampling of those rights and the court’s capitulation shall not prevail. Canadians are determined to deprive monopoly right of the power to deprive them of what is theirs by right.

Let’s make it happen

Extract from “Steel, Not Steal! Keep Stelco Producing! Let’s Make It Happen!” TML Daily, October 15, 2015.

A pro-social alternative for the former Stelco exists. The problem is to grasp the reality that an alternative is possible and collectively organize the fight to bring it into being.

To see justice done, the Ontario government should immediately remove the former Stelco from the bankruptcy court and place it in the hands of a public trustee under the government’s authority. The government should reject with contempt U.S. Steel’s claim as creditor. No Debtor-In-Possession funds from the Brookfield Capital vultures should be used and all lenders charges should cease. The bankruptcy monitor and all others given standing in the CCAA proceeding should be relieved of their duties without rights to further drain the former Stelco of revenue.A government order should be issued relieving U.S. Steel of all rights to sell steel in Canada until it has fully met its obligations to the employees for their retirement benefits and pensions making the existing pension plans whole, and having paid in full all municipal taxes and other claims, and paid restitution for the damage it has inflicted on the Canadian economy in violation of the agreements it undertook upon the 2007 purchase of Stelco.

U.S. Steel must hand over the order book and immediately cease filling any orders from its U.S. plants. The public trustee should continue all of the company’s steel production and the filling of orders from Hamilton and Lake Erie Works and vigorously pursue new orders. Aside from meeting the claims of active workers for wages and benefits, the social value steelworkers produce and realize should go towards renewing production in Hamilton and Lake Erie Works, fully meeting all claims for post-retirement benefits and pensions, paying municipal taxes and local suppliers and contractors and dealing with environmental concerns.

Yes, to a Pro-Social Alternative for the Former Stelco!
Let’s Make It Happen

Source: TML Daily, November 5, 2015


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