Sherwin, Noranda embroiled in payment dispute; judges order mediation

By Caroline Salls

Pittsburgh, Aug. 3 – Sherwin Alumina Co., LLC filed a lawsuit Tuesday against Noranda Bauxite Ltd. that asks the U.S. Bankruptcy Court for the Southern District of Texas to rule that Sherwin is not in breach of the parties’ interim bauxite arrangement and that it fully complied with and discharged its obligations under that arrangement.

Under the interim arrangement, Sherwin agreed to purchase, and Noranda Bauxite agreed to supply, bauxite over a 90-day period.

Sherwin said that after it purchased and paid for the minimum amount of bauxite required under the arrangement, it reached the conclusion that it could no longer continue to operate as a going concern and had to begin the process of winding up its affairs. As a result, Sherwin canceled its final outstanding order for more bauxite.

However, Sherwin said Noranda still contends that Sherwin is obligated to pay more than $1.2 million for bauxite that it can no longer take delivery of or use, regardless of whether Noranda can or will sell that bauxite to other customers.

Without the requested declaratory relief, Sherwin said this dispute over whether it is obligated to pay more than $1.2 million and take delivery of bauxite that it can no longer process “will hamper Sherwin’s ability to craft a confirmable Chapter 11 plan of liquidation and to wind down its business in an environmentally safe manner.”

As a result of Sherwin’s lawsuit and a motion by Noranda Bauxite in its bankruptcy case in the U.S. Bankruptcy Court for the Eastern District of Missouri to order Sherwin to comply with the interim arrangement, judges David R. Jones and Barry S. Schermer on Wednesday ordered the parties to participate in mediation.

The judges said they believe a commercial resolution between the parties “makes more sense than ramping up litigation.”

Sherwin, a Gregory, Texas-based alumina producer, filed for bankruptcy on Jan. 11, 2016. The Chapter 11 case number is 16-20012.

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