WCI unsecured creditors drop appeal of plan confirmation denial

By Caroline Salls

Pittsburgh, May 16 - WCI Steel, Inc.'s official committee of unsecured creditors dropped its appeal of a U.S. bankruptcy court's decision to refuse confirmation of WCI's plan of reorganization, according to a Monday filing.

According to a May 9 filing, the noteholders' issues of appeal included:

*Whether the court was in error in denying the noteholders' plan because they did not have a fully executed collective bargaining agreement with the United Steelworkers of America;

*Whether the court was wrong in excluding the expert testimony of the noteholders' labor counsel, which said the noteholders would be able to negotiate an agreement with the steelworkers;

*Whether the court was wrong in saying the noteholders' plan was not feasible because of its treatment of WCI's current pension plan;

*Whether the bankruptcy court was wrong in ruling that it was only "speculation" whether WCI parent Renco Group, Inc. would take over the current pension plan, even though it would be in Renco's financial best interest to do so; and,

*Whether the court was wrong in believing that the $100 million in new notes to be issued to the secured noteholders under the plan is evidence of the value of their collateral.

On April 13, the bankruptcy court denied confirmation of both WCI's plan and the competing noteholders' plan.

The court said the company's own plan cannot be confirmed because of "the overly conservative reckoning of enterprise value of the reorganized debtor and aggressive characterization of the new value being provided by existing equity; [and] the debtors' undervaluation of the secured noteholders' collateral, i.e., plan, property and equipment."

The U.S. Bankruptcy Court for the Northern District of Ohio said the noteholders' plan is not feasible and therefore cannot be confirmed.

WCI, a Warren, Ohio-based steel company, filed for bankruptcy on Sept. 16, 2003. Its Chapter 11 case number is 03-44662.

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