Renco Settles Lawsuit with Pension Guaranty Agency
YOUNGSTOWN, Ohio – Billionaire industrialist Ira Rennert and his company, Renco Group, have settled a lawsuit filed by the U.S. Pension Benefit Guaranty Corp., which accused Renco of ducking more than $70 million in pension obligations to steelworkers.
Among them are more than 1,000 former employees of the now-defunct RG Steel plant in Warren.
A letter both parties filed jointly yesterday in U.S. District Court for the Southern District of New York in Manhattan informed Judge Richard Sullivan that they had reached a “settlement in principle” to resolve the issue.
Terms were not disclosed.
Sullivan ordered the case dismissed with prejudice, meaning the PBGC could refile its complaint should it have cause to believe Renco has violated the agreement reached.
The settlement comes after a trial without a jury held in December. Sullivan had yet to issue a ruling.
Renco Group owned RG Steel, a group of three steel mills that included the former WCI Steel plant in Warren where more than 1,100 were employed. Renco also owned the Sparrows Point mill near Baltimore and another in Wheeling, W.Va.
The complaint, filed in 2013, alleges that Renco Group evaded funding its pension obligations to steelworkers by selling a 24.5% stake in RG Steel to Cerberus Capital Management LP in 2012, just four months before RG Steel filed bankruptcy.
The lawsuit contends that Renco owed $70 million to its pension plan at the time.
According to court papers, Renco Group encountered financial problems about a year after purchasing the mills from Severstal, a Russian conglomerate that purchased the Warren assets in 2008 from a bankrupt WCI.
In its complaint, the pension benefit guaranty board said Renco intended to terminate RG Steel’s pension plans in January 2012, but held off taking legal action because Renco assured the board that it would not sell an equity stake to another party.
Four days later, the company informed the PBGC that it had closed a deal with Cerberus to sell am equity position. Had the PBGC terminated the plan before the sale, Renco would have been liable for the pensions.
Instead, the PBGC was saddled with the $70 million liability and sued Renco for $97 million, contending the company deliberately misled the agency regarding Cerberus.
RG Steel filed for bankruptcy in May 2012. The Warren mill was later auctioned off piecemeal, and most of the buildings at the sprawling complex on Pine Avenue have been razed.
Estimates put Rennert’s net worth at $4.8 billion.
Pictured: Ira Rennert.
Copyright 2024 The Business Journal, Youngstown, Ohio.
