Canadian Manufacturing

U.S. Steel Canada seeks further court protection to continue restructuring

Company likely unable to 'avoid ceasing operations' in Hamilton and Nanticoke without order

September 18, 2015  by Canadian Staff

U.S. Steel Canada said it is seeking a court order to suspend payments of pensions and retiree health benefits. PHOTO: U.S. Steel

U.S. Steel Canada said it is seeking a court order to suspend payments of pensions and retiree health benefits. PHOTO: U.S. Steel

HAMILTON, Ont.—U.S. Steel Canada Inc. has filed a motion with the Ontario Superior Court of Justice seeking an order obtain further relief under the Companies’ Creditors Arrangement Act, which would allow it to continue operations beyond 2015.

USSC has been operating under CCAA creditor protection since Sept. 16, 2014, but the court-ordered shield is set to expire Dec. 11.

“With a Court Order we can preserve work and meet obligations to approximately 2,200 employees and continue to deliver high-quality steel products to our customers from our two Canadian steelmaking facilities,” Michael McQuade, president and general manager of USSC, said. “The Court Order, if granted, would also provide additional time to find a consensual restructuring solution, and to conduct a new Sale and Restructuring Process when market conditions improve.”

The company said despite its best efforts under its Sale and Restructuring Process, the “unwillingness of stakeholders to agree to compromises proposed in the offers submitted, and the unwillingness of bidders to modify their conditions to be acceptable to stakeholders, has resulted in no executable offer being received to-date.” Additionally, stakeholders in USSC have been unable to reach a consensual restructuring agreement.


“These factors are further aggravated by the continued deterioration of the North American steel market and the increasing volume of offshore imports,” USSC said.

The company’s parent, U.S. Steel Corp. is attempting to relocate Canadian production to its facilities in the U.S., something USSC said has also contributed to the need for a court order. The reallocation is intended to take effect in October 2015.

“Without this court order, U.S. Steel Canada would unlikely be able to avoid ceasing operations at the end of 2015, jeopardizing employment in Hamilton and Nanticoke,” the company said.

As part of the order USSC is asking the court to allow it to suspend “all pension funding contributions except contributions for current service,” as well as the payment of post-employement health, medical, dental and life insurance benefits in the near term for the company’s retirees.

USS was allowed to take over Stelco in 2007 and has been engaged in a legal battle with workers and government virtually since that time.

Earlier this week the United Steelworkers union said USS “must be stopped” from “destroying” its Canadian operations, and called on the federal government to step in.

“Thousands of Canadian workers and pensioners will suffer if U.S. Steel is allowed to continue on this path,” USW Ontario director, Marty Warren, said.