USSC – Oct 8, 2015
October 8, 2015
On October 8, 2015, our firm attended the annual general meeting of the Stel Salaried Pensioners Organization (“SSPO”) held at the Hamilton Convention Centre. Approximately 1,000 retirees and employees attended the meeting. There were presentations by SSPO Executive members and former Stelco Executive Vice-President William Missen. Andrew Hatnay and Adrian Scotchmer of our firm attended to give an overview of the CCAA proceeding and to answer questions from the audience. A copy of the summary sheet that we handed out at the meeting is attached here.
On October 8 and 9, 2015, the motions referred to below proceeded before Mr. Justice Wilton-Seigel (the “CCAA Judge”) along with another motion served by USSC on an urgent basis for approval of a “Transition Services” Agreement, which sets out the protocol for USS to disengage from USSC in an orderly manner. As of this writing, the CCAA Judge has not released his decision on the motions.
The USSC Cash Conservation and Business Preservation Motion
The motion before the court on October 8th and 9th, 2015 that most directly affects retirees at this time is USSC’s “Cash Conservation and Business Preservation” Motion. The motion was made necessary due to USSC’s immediate liquidity problem. As the Monitor reports in its 13th Report dated October 2, 2015:
[T]he unfortunate (but inevitable) fact is that USSC does not have access to liquidity or financing to honour these obligations in the present circumstances and that, if the [Cash Conservation and Business Preservation Motion] Order sought by USSC is not made, it will not have the financial resources to continue to carry on in business for the period of time necessary to develop a long term restructuring solution, and that a near term cessation of operation will be necessary.
The USSC Cash Conservation and Business Preservation Motion seeks to discontinue the sales and restructuring/recapitalization process (“SARP”) and implement cash conservation and business preservation plan which includes:
1. the suspension of contributions or payments to USSC’s nine registered non-contributory defined benefit pension plan, other than normal cost contributions, and to the RCA Trust;
2. the suspension of supplementary pension payments to beneficiaries pursuant to unfunded individual retirement benefit contracts and individual retiring allowances;
3. the near-term suspension of other post-employment benefit payments (including health and dental benefits but not life insurance – see below) to beneficiaries effective October 9, 2015 (the “OPEBs”);
4. the suspension of salary-continuance payments to those USSC employees that are not actively employed or providing services to USSC;
5. the suspension of payment to the Pension Benefits Guarantee Fund in respect of assessments; and
6. the suspension of payments on account of municipal taxes.
Representative Counsel negotiated with USSC for two concessions to the Cash Conservation and Business Preservation Plan:
1. that USSC continue to pay life insurance premiums so that life insurance remains in place, since these benefits could not be reinstated if the group life insurance policy lapses; and
2. that the suspension of all other benefits is a temporary suspension, subject to further order of the Court and is not to be understood as a termination.
The Cash Conservation and Business Preservation Motion will not affect payment of your monthly pension payment from the registered pension plans at this time.
As reported above, as of this writing, the CCAA Judge has not released his decision on the Cash Conservation and Business Preservation Motion and whether to grant the measures listed above.