By Sakthi Prasad
Jan 29 (Reuters) - The U.S. Pension Benefit Guaranty Corp
has sued Renco Group Inc for $97 million, accusing it of trying
to avoid the pension obligations of bankrupt steelmaker RG Steel
LLC, a court filing showed.
Renco Group, founded by New York billionaire Ira Rennert,
had a controlling interest in RG Steel, which had sponsored two
pension plans for about 1,350 people.
Last year, Renco sold 24.5 percent of its ownership stake in
RG Steel to an affiliate of the New York-based investment firm
Cerberus Capital Management before the steelmaker filed for
Chapter 11 protection.
The Pension Benefit Guaranty Corp (PBGC) said in the court
filing that Renco had reduced its ownership stake in an attempt
to free itself from RG Steel's pension obligations. It said in
the filing that ownership of 80 percent or more in RG Steel
would have made Renco responsible for the steelmaker's pension
The $97 million in damages sought by the PBGC includes the
plans' unfunded benefit liabilities, unpaid minimum funding
contributions and termination premiums.
Renco is a private holding company that makes long-term
investments in companies across a range of industries, including
mining and steel. It and its subsidiaries employ more than
20,000 people worldwide and have revenues in excess of $5
billion annually, the filing showed.
"The facts will show that these claims are baseless," Andrew
Shea, a spokesman for Renco Group, told Reuters on Tuesday.
RG Steel filed for Chapter 11 bankruptcy protection last
May, saying it could not overcome the deterioration of the steel
market and would sell off the three plants it had bought from
Russian steelmaker Severstal for $1.2 billion.
The PBGC is a U.S. government agency that was created by the
Employee Retirement Income Security Act of 1974 to encourage the
continuation and maintenance of private-sector defined benefit
The PBGC is not funded by general tax revenues. It collects
insurance premiums from employers that sponsor insured pension
plans, earns money from investments and receives funds from
pension plans it takes over.
The case is Pension Benefit Guaranty Corp vs The Renco Group
et al, Case No. 13-cv-621, U.S. District Court, Southern
District of New York.
Follow us on Twitter @ReutersLegal | Like us on Facebook