RG Steel creditors' objections may delay hearing on DIP, sale process

By Jim Witters

Wilmington, Del., June 20 - RG Steel, LLC's official committee of unsecured creditors is seeking a delay of as long as three weeks for a hearing on the company's debtor-in-possession financing facility and its proposed sale procedures.

A delay would allow the week-old committee more time to negotiate with the lender and the debtors to resolve its objections to the DIP and asset sale procedures, committee attorney Gregory A. Horowitz told the court during a June 20 telephone status conference in the U.S. Bankruptcy Court for the District of Delaware.

Horowitz said he could be ready to present a case at a scheduled June 21 hearing, but additional time could lead to a resolution of the issues and prove to be a better use of the estate's time and resources.

A delay of the hearing would not harm any parties, because the company continues to collect revenue and pay down its debt, he said.

The committee is also seeking to extend the end of the sale process by three weeks.

Debtors' attorney Matthew A. Feldman agreed that the company would not become insolvent or illiquid during the coming three weeks. But he objected to the delay, saying that the debtors are under a June 21 deadline to get its bid procedures approved and a July 18 deadline for a sale hearing.

"I am also concerned that the ultimate goal of the committee to push out the process will send mixed signals to the market and result in the estate not receiving the highest and best bid possible for the assets. This is more about the sale process than about the DIP," Feldman said.

Judge Kevin J. Carey said the parties must come together on a schedule.

"I prefer not to have a contested evidentiary hearing tomorrow. But if the parties can't reach a consensus on the scheduling of the sale process, come in tomorrow prepared to present your case," Carey said.

The hearing is scheduled for 11 a.m. ET on June 21.

Committee objections

As previously reported, the committee claims the company is seeking a fire sale of its assets "that guarantees assets will be sold for less than fair value and minimizes the possibility of selling these assets to a purchaser who will operate, not mothball, facilities for the benefit of employees, trade creditors and other constituents."

The creditor group said the aggressive schedule is required by its first-lien lenders, but benefits only RG Steel's existing owners.

Specifically, the committee said the owners would get broad releases, a lien on avoidance actions, a pre-approved credit bid right and control of an auction where they are the bidders, all for no consideration to the company.

RG Steel, a Sparrows Point, Md., flat-rolled steel processor, filed for bankruptcy on May 31. The Chapter 11 case number is 12-11661.

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