Volume 49, Issue 7 - July 2014

Legislation&Legal

Creditors Committee Puts Forth Liquidation Plan for Dlubak Corporation

The representation of unsecured creditors of Dlubak Corp., which filed for bankruptcy last August, has put forth a plan of orderly liquidation. The Plan was dated May 1, approved by the United States Bankruptcy Court for the Western District of Pennsylvania May 6 and is scheduled for a confirmation hearing July 2.

According to court documents, “This is a liquidating Chapter 11 Plan, with substantially all of the debtor’s assets having been sold. The remaining assets of the debtor’s Estate include claims for fraudulent transfers, unauthorized post-petition transfers, and related state law claims.”

The order of priority for claim recovery is as follows: Class 1, all priority claims; Class 2, all secured claims; Class 3, all allowed general unsecured claims against the debtor; and Class 4, all equity interests in the debtor. Frank C. Dlubak is the holder of the equity interest and owns 100 percent of the stock of the debtor, according to the court.

The priority claims in the plan total $328,516.40, with $224,321 going to United Steelworkers and $104,195.40 to various former wage employees. The Class 3 general unsecured claims “have been estimated in the approximate amount of $[5 million].”

The Official Committee of Unsecured Creditors of Dlubak Corp. wrote a letter dated May 12 to all creditors of Dlubak, recommending each unsecured creditor vote in favor of the plan and setting a vote deadline of June 25.

“. . . The committee believes that the Plan is fair and provides unsecured creditors with the best possible recovery under the circumstances of this Case,” reads the letter.

Dlubak Specialty Glass, owned by Consolidated Glass Holdings, is not a part of the bankruptcy proceedings.

Partial Settlements Pending in Steel Manufacturers Lawsuit
Three steel manufacturers are awaiting approval on settlements stemming from an ongoing lawsuit that has yet to be certified as “Class Action.” The lawsuit was filed by several businesses, alleging eight steel manufacturers—ArcelorMittal, Nucor Corp., United States Steel Corp., Gerdau Ameristeel Corp., AK Steel Holding Corp., Steel Dynamics Inc., SSAB Swedish Corp. and Commercial Metals Company (CMC)—“conspired, in violation of the U.S. antitrust laws, to restrict their output and therefore raise or ‘fix’ the prices for Steel Products sold for delivery in the United States between April 1, 2005 and December 31, 2007.”

The companies that collectively filed suit against the eight manufacturers are Standard Iron Works, Wilmington Steel Processing Co. Inc., Capow Inc. d/b/a Eastern States Steel, Alco Industries Inc. and Gulf Stream Builders Supply Inc.

All of the defendants in the case deny the allegations. However, three companies—CMC, AK Steel and Gerdau—agreed to collectively pay $15.9 million into a settlement fund to be distributed at a later time.

A hearing is scheduled for July 10 and if the settlements are approved the three companies will be relieved of their positions as defendants in the lawsuit. If approved, Gerdau will pay $6.1 million, AK Steel will pay $5.8 million and CMC will pay just under $4 million. Litigation will continue for the other defendants.

Court Grants MPM Authorization for Full Amount in DIP Financing
MPM Silicones, which filed for Chapter 11 bankruptcy on April 13, 2014 in the U.S. Bankruptcy Court in the Southern District of New York, reached an agreement with certain key stakeholders on the terms of a balance sheet restructuring plan. To implement the plan, MPM filed to reorganize under Chapter 11 of the U.S. Bankruptcy code.

On May 23, the U.S. Bankruptcy Court for the Southern District of New York granted MPM final authorization to access the full amount of its $570 million in committed debtor-in-possession (DIP) financing, according to a press release.

“With the Court’s final approval of our $570 million DIP financing, MPM now has access to $140 million of additional liquidity to supplement cash from operations as needed,” says Craig O. Morrison, chairman, president and CEO of MPM. “Together, these resources provide MPM with the financial flexibility to continue operating its business in the normal course as it completes its balance sheet restructuring.

Throughout this important process we remain fully committed to providing our customers with the high quality products and services they expect from MPM, and deeply value their ongoing partnership and support.”

Canadian Court Orders Northglass to Pay $1.8 Million
The Canadian Federal Court ruled on the damages of a case between Glaston Group and Northglass Technology & Industry Co. Ltd. The court ordered Shanghai Northglass to pay Glaston approximately $1.8 million, including interest, in damages as a result of a November 2010 court ruling on Northglass’ infringement of Glaston’s two patents for its unique tempering and bending technology.

According to a Glaston announcement, the Court declared that Northglass infringed Glaston’s Canadian Patent Nos. 1,308,257 and 2,146,628. Glaston says it will continue to be active in protecting its intellectual property rights globally and currently has several proceedings and investigations ongoing in Europe, the U.S. and Asia.

Court of Appeals Affirms PPG’s Implementation of Wage Structure
The U.S. Court of Appeals for the Seventh Circuit affirmed May 9 that PPG Industries Inc. didn’t violate a past arbitration award to the United Steelworkers and Local Union 193-G, despite contrary arguments by the union.

According to court documents, in 2009, PPG unilaterally implemented a two-tier wage system that cut employees’ compensation at an Illinois glass manufacturing plant, which the union argued was in violation of an arbitration award issued in June that year. The arbitration spawned from a disagreement between PPG and the union during a three-day negotiation conference also at the beginning of June 2009.

During the meetings, PPG proposed the two-tier system and pay cuts. According to the court, the union argued that the parties’ bargaining agreement “barred new proposals from being made after the conference’s first day.”

PPG disagreed, and a grievance from the union prompted the parties to submit their dispute to an arbitrator.

The arbitrator subsequently concluded that by the beginning of the bargaining conference, the union “knew or should have know[n] some of [PPG’s] economic proposals—specifically [PPG’s] labor cost goals as well as the two tier wage structure,” citing a meeting in May and a corresponding email, both in which PPG proposed lowering its labor costs from $37 to $27 an hour while suggesting the two-tier system.

PPG proceeded to implement the system following the union’s refusal of a post-arbitration offer, and the union then sued PPG under the Labor-Management Relations act, seeking to “confirm and enforce” the arbitration award, though the district court ruled in favor of PPG.

“PPG is pleased that the U.S. Court of Appeals for the Seventh Circuit has affirmed the district court’s award of summary judgment in its favor, confirming that PPG did not violate the terms of the arbitrator’s award when it unilaterally implemented certain terms and conditions of employment for employees at its Mt. Zion, Ill., facility,” says PPG’s corporate communications manager Mark Silvey.

That ruling was affirmed despite the union’s appeal last December, which insisted the district court “misconstrued” the arbitration award.

The appeals court also rejected the union’s claims that its conclusion rendered the arbitrator’s award “meaningless,” pointing to PPG’s removal of several proposals such as limited severance benefits and the altering of the pension agreement as examples of obligations imposed on PPG.

“The award may not have been as favorable to the Union as it wanted,” the court said, “but it was not ‘meaningless.’”

USG
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