Judge Faults WCI Reorganization Plan

U.S. Bankruptcy Judge Marilyn Shea-Stonum filed an opinion last week concerning confirmation of the two proposed WCI Steel, Inc. reorganization plans previously presented to the court.

According to published reports the two plans do not meet the legal requirements to allow the steel producer to move out of bankruptcy.

According to WCI, the opinion is not a formal ruling on the plans, however, and the judge has said that she will not enter such a ruling for the next several weeks. The opinion contemplates a period of moratorium for further efforts by both plan sponsors to reach a consensual agreement.

The WCI reorganization plan, sponsored by its ultimate parent company, The Renco Group, Inc., would have enabled WCI to emerge from bankruptcy under its current ownership with a new labor contract in place.

Edward R. Caine, WCI vice chairman and chief restructuring officer, said that WCI remains committed to presenting a reorganization plan that maximizes the long-term value of the WCI estate. He added that the court's opinion did indicate that a framework for a confirmable plan exists and suggested that the parties explore possible amendments to the WCI plan as a means to that end.

"We are obviously disappointed that completion of the process will be delayed, but WCI is resolute in our desire to bring forth a reorganization plan that will be confirmed," Caine said. "WCI is a solid company that will ultimately emerge from bankruptcy as a viable player in the steel market."

"We have the financial capability to meet our commitments to our bankers, vendors and employees," Caine said. "We've greatly appreciated their support during these proceedings and we ask for their continued patience as we work through the reorganization process."