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Creditors Rip LTV Reorganization Plan

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From Associated Press

LTV Corp. filed a long-delayed reorganization plan Wednesday to extricate itself from a nearly five-year stay in bankruptcy court, but the steel-aerospace giant’s proposal met instant criticism from creditors.

Company officials said they did not believe that the proposed restructuring of $6 billion in debt would survive the bankruptcy approval process intact.

The company’s plan, filed with U.S. Bankruptcy Judge Burton R. Lifland in New York, proposes full recovery of claims by secured creditors but leaves others with 2.6% to 50.3% of their claims.

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“We think this proposal provides the highest recoveries at the earliest date and is better than any other alternatives that are available to creditors,” said K. C. Caldabaugh, vice president and treasurer of the Dallas-based company.

But an LTV creditors committee said in a statement that the recovery estimates were “substantially overestimated.”

LTV stock closed down 62.5 cents a share to $1.125 on the New York Stock Exchange on Wednesday.

Under the plan, LTV’s stockholders, in common and four preferred classes, would receive new common stock worth $25 million. Before the filing, the company’s five stocks had a market value of $250 million.

Creditors also complained about LTV’s repayment of $3 billion to under-funded pension plans in a deal with the Pension Benefit Guaranty Corp. The PBGC, a federal agency that insures the pensions of U.S. workers, and LTV had disputed the liability for the plans since the Chapter 11 filing in July, 1986.

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