The United Steelworkers union was in court once again Thursday in a bid to boost the claims of pensioners amid the ongoing restructuring of U.S. Steel Canada.
During the March 17 court hearing in Toronto, Gordon Capern, a lawyer representing the United Steelworkers, accused U.S. Steel of “oppressive conduct and breach of fiduciary duties” towards the union’s members. The court hearing is part of the union’s bid to have its members’ pension claims rank ahead of U.S. Steel Canada’s debts as the insolvent company undergoes a restructuring that has sparked a fight about who gets what’s left of it.
Capern said there should be an “equitable subordination” of claims in which the pension claims would take priority. He also called for the widest possible range of remedies to be available to the union’s members. “Remedies need to be tailored carefully to the circumstances. [That’s why] we want the broadest array of remedies open to us.”
The dispute comes as the company’s parent, U.S. Steel, has said money it invested in the Canadian subsidiary should count as debt, which would affect the claims of other creditors such as the pension plan members. U.S. Steel declined to comment for this story.
On Feb. 29, the court ruled in favour of U.S. Steel Canada’s U.S. parent. It gave U.S. Steel creditor priority in the insolvency proceedings of U.S. Steel Canada. This decision was about the first phase of the U.S. Steel proceedings.
The union has said it will appeal the Feb. 29 decision. “The Court found that [U.S. Steel] and [U.S. Steel Canada] knew [U.S. Steel Canada] was insolvent by Oct. 30, 2013. The Court ignored that [U.S. Steel], the controlling parent of [U.S. Steel Canada], kept this fact secret from the pensioners and other USW stakeholders and other creditors,” the union said in a recent press release.
The March 17 court hearing had to do with the union’s appeal about the remedies the court can grant its members in the second phase of the U.S. Steel proceedings. The hearing was over that same day, but no decision has been reached yet.
On Oct. 10, 2015, a ruling approved U.S. Steel Canada’s plan to proceed without paying medical benefits to retirees of the company.
“These are vulnerable people who have done nothing wrong,” stated a letter from the union to Prime Minister Justin Trudeau and Ontario Premier Kathleen Wynne.
“They are losing essential health-care benefits earned as deferred compensation during a work life spent in a heavy industrial setting.”
On Sept. 16, 2014, the company was granted protection from its creditors under the Companies’ Creditors Arrangement Act.
On Dec. 22, 2015, U.S. Steel Canada filed a motion seeking approval from the court to commence a sale and investment solicitation process, seeking to gain interest in and opportunities for a sale or investment in all or part of the assets and business operations.
It was also announced that the judge had approved a plan by U.S. Steel Canada’s parent company to sever ties with the Canadian operations. Part of the deal is that U.S. Steel won’t be a bidder if there is a second effort to sell the operations in Hamilton and Nanticoke.
— With files from Jennifer Paterson