Ormet's reorganization plan faces confirmation challenges

By Jeff Pines

Washington, Nov. 11 - Ormet Corp.'s proposed plan of reorganization faces confirmation challenges from the United Steelworkers of America, the Office of the U.S. Trustee, the Ohio Environmental Protection Agency and others.

All of the objections were filed Wednesday with the U.S. Bankruptcy Court for the Southern District of Ohio.

The USWA represents roughly 1,700 of Ormet's workforce, and the company no longer has a contract with its unionized workers. Absent a labor pact, the workers will strike rendering the reorganization unfeasible. "A strike will doom the reorganization," the union said.

Reorganization plans are supposed to provide a road map for the company directing it away from liquidation or another bankruptcy, it said.

Another issue for the union is that Ormet has not said who its permanent chief executive or board of directors will be, and it does not have a commitment letter for exit financing.

The trustee objects to confirmation because the plan would free non-debtor parties, including all officers and directors of Ormet, past and present, from any liability. The trustee said this violates the bankruptcy code.

Ohio's EPA objects to confirmation because the plan contains language that treats two sites as claims, not as ongoing responsibilities that will not be discharged.

Ormet disposed of hazardous substances at a landfill in Monroe County, Ohio, and at the company's Hannibal, Ohio, site and is responsible for both sites, the regulator said.

The plan, however, lacks enough information for OEPA to determine whether the company will comply with the state's environmental laws, it said.

A plan that violates a state's environmental laws would not be proposed in good faith, which means it would be in violation of the bankruptcy code, the regulator said.

Ormet, a Wheeling, W.Va.-based aluminum company, filed for bankruptcy on Jan. 30, 2004. Its Chapter 11 case number is 04-51255.

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