Judge in LTV Bankruptcy Will Hear Creditors’ Plan
A bankruptcy judge, growing increasingly impatient with the lack of progress in LTV Corp.’s 5 1/2-year bankruptcy case, said Monday that he would consider a reorganization plan by some creditors to speed the company’s emergence from Chapter 11.
LTV filed for bankruptcy protection in July, 1986, because of difficulty it was having paying its large pension obligations and increasing competition from foreign steelmakers.
U.S. Bankruptcy Judge Burton R. Lifland said LTV has 45 days more to come up with its own plan to emerge from bankruptcy--the 19th time he has done so.
But in an unusual move, the judge also said LTV’s Parent Creditor Committee, which represents creditors of the parent company, can also file an alternative.
In most bankruptcy cases, only the company is allowed to put forward a reorganization plan during the “exclusivity period.”
The ruling came after a status hearing Monday at which creditors said they were still at odds over how much the different groups would recover in a reorganization.
Although LTV’s two largest creditor groups, its Steel Creditor’s Committee and the Pension Benefit Guaranty Corp., reported reaching a breakthrough settlement over allocations, smaller creditor groups did not support their agreement. The PBGC is the federal agency that insures LTV’s pension plans.
The PBGC had agreed to negotiate with other creditors after a plan of reorganization LTV filed in May won no creditor support.
The LTV plan proposed giving the bulk of the funds in LTV’s estate to the PBGC and paying most other creditors’ claims with a new stock in the reorganized company. The $3.1 billion in claims that the agency holds against LTV has been a major hurdle blocking the company’s quick reorganization.
Harold Novikoff, a lawyer for LTV’s Steel Creditors’ Committee, said the talks had led to the PBGC agreeing to make some concessions from its earlier agreement with LTV. “I don’t want to say they were generous,” he said. “They weren’t. But they did enough.”
In another move, the judge also directed LTV Corp. to inject at least $39 million into an underfunded company pension plan.
Lifland said he will decide in three months whether the company should make a second $39-million payment into the pension plan.
Lifland said the second payment is subject to continuing negotiations between creditor groups and the federal agency that insures pensions, which are struggling to come up with a reorganization plan for the Dallas-based company.
But the Parent Creditor and Aerospace Creditor committees maintained that negotiations were still at an impasse. They object to plans to use proceeds from the sale of LTV’s aerospace unit to pay claims against the company’s steel division.
