Ormet $25.25 million asset sale impeded by Steelworkers Trust appeal

By Kali Hays

New York, July 18 – The Steelworkers Pension Trust is seeking a stay of Ormet Corp.’s Thursday order authorizing the $25.25 million sale of the company’s Hannibal, Ohio, property, plant and equipment assets to Niagara Worldwide, LLC pending an appeal by the trust, according to a Friday motion with the U.S. Bankruptcy Court for the District of Delaware.

The appeal of the trust resulted from the court’s decision to overrule its objections to the sale based on claims that Ormet failed to provide for the assumption of pension plans by Niagara in the asset purchase agreement, nor did it comply with requirements under the Employee Retirement Income Security Act of 1974 regarding pension trust withdrawal liability issues.

“The trust believes that this court erred in approving the sale as the orders grant an impermissible release of withdrawal liability and an injunction against the trust. Moreover, the trust believes and avers that the sale was part of a series of transactions by the debtors to evade and avoid withdrawal liability,” the motion stated.

Ormet is obligated to the trust for a $5.5 million withdrawal liability claim.

The trust went on to claim that the “only beneficiary of the sale is the debtor-in-possession lender” and said it believes the bankruptcy case is headed for a structured dismissal, making the sale “nothing more than a foreclosure by the DIP lender for its own benefit,” according to the motion.

Ormet, a Hannibal, Ohio-based producer of aluminum, filed for bankruptcy on Feb. 26, 2013. The Chapter 11 case number is 13-10334.

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