Administration September 10, 2005

Georgetown Steel Gets Bankruptcy Court Reorg OK

October 21, 2004 (PLANSPONSOR.com) - A US Bankruptcy Judge has approved a business reorganization for the bankrupt Georgetown Steel Co. under which the company would begin paying creditors early next year.
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How much remaining creditors will get depends on whether Georgetown Steel receives some money it expects and whether the federal Pension Benefit Guaranty Corp. reduces its $60-million claim for Georgetown’s pension liabilities, said Georgetown lawyer Michael Beal, according to the Myrtle Beach Sun News.The agency claims about a $60 million liability, and Georgetown Steel thinks it should be more like $20 million.

The court approval came exactly a year after the plant shut down and one day short of the anniversary of the date the company filed for Chapter 11 bankruptcy protection.

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Bankruptcy Judge John Waites took note of the anniversary and commended the participants for moving relatively quickly in what is a complicated case. “I think you’ve all done an outstanding job,” Waites said.

Beal, told Waites, “I think we’ve accomplished a lot over the course of the past year.” The major creditor was paid, the plant was sold and many workers who were laid off got a new job under new ownership, Beal said. Also there is $12 million on hand to pay creditors, Beal said. .

Creditors will receive their main payments early in 2005 and possible additional amounts when new money is received, according to the newspaper story. Beal said almost 90% of the creditors also voted for the plan.

Administration September 9, 2005

Huntington Pension Bond Sale Apparently Off for Now

September 9, 2005 (PLANSPONSOR.com) - Local lawmakers in Huntington, West Virginia have postponed consideration of a measure imposing a 1% occupation tax as part of a plan to help pay the city's $117 million pension shortfall.
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City Council members tabled a vote on the tax this week after discovering that some state lawmakers and financial advisers questioned the constitutionality of the plan and what the state’s responsibility would be if the city were to default on payments on revenue bonds sold to help make up the pension shortage, the Huntington Herald-Dispatch reported.

For now, that means people who work in the city will be spared from having to pay the proposed tax and that the unfunded liability will continue to chomp away at the city’s budget, the newspaper said.

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Implementing the occupation tax had been in the works since the Legislature gave Huntington the authority in May to issue revenue bonds to pay off its unfunded police and firefighter pension liability (See  State Officials Continue Struggling With Pensions, Benefits ). Revenue generated from the occupation tax was to be used to pay off the revenue bonds, which in turn would have allowed the city to close the existing defined benefit pension plan and establish a defined contribution pension plan for all future fire and police hires.

Resolving those issues requires the Legislature to make modifications to the pension bill that it adopted in May. City leaders had hoped to convince Governor Joe Manchin to add the bill to the Legislature’s ongoing special session agenda.

Manchin refused because city officials cannot come to terms with the Huntington Fire and Police department unions on the benefits their members would receive under a new pension plan, Lara Ramsburg, the governor’s spokeswoman, told the newspaper.

The main sticking point in the pension bill with bond lawyers and financial advisers who have helped the city with its plan is the December 31 deadline for selling the revenue bonds and adopting the occupation tax. City officials did not request any deadline in the bill, Kent said. Rather, it was added by the House, he said.

“It’s the opinion of bond lawyers and financial advisers that this deadline is a potential fatal flaw,” he said. “They’re afraid the argument could be made that this bill is special legislation for Huntington, and as such would be unconstitutional.”

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