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Bayou Steel Laid Off Workers sue Hedge Fund Owner

Steel News - Published on Fri, 22 May 2020

Image Source: Bayou Steel
NOLA reported that a group of former Bayou Steel employees is suing the former owners of the LaPlace plant, alleging they deliberately reneged on an employment contract without warning before shutting down the plant last year.
Their lawsuit alleges that Black Diamond and its owner, Stephen Deckoff, had negotiated a new employment contract with steelworkers in bad faith, knowing for some time before it signed the contract in late September that it planned to shut the plant just a few days later.

The 40-year-old steelworks, which specialized in recycling scrap steel, was forced into Chapter 11 bankruptcy in September by its beneficial owner, the Connecticut-based hedge fund Black Diamond Capital Management. The company laid off 376 workers at the LaPlace plant. Another 100 employees at three other operations around the country were also laid off.

Black Diamond is a USD 9 billion hedge fund that specializes in buying the debt of companies that are in financial trouble. It first acquired Bayou Steel in 2003 for about USD 185 million, including about USD 30 million in debt, after the steelmaker had fallen on hard times. It sold it five years later to Arcelor Mittal for USD 475 million and then bought it back again at a steep discount in 2016. In the years before bankruptcy, Black Diamond cut costs, including reducing the workforce by about one-third. When it was forced into Chapter 11 bankruptcy Bayou Steel owed up to USD 100 million to around 2,000 creditors, including local suppliers and service providers, and had less than USD 50,000 in liquid assets available. The main assets of the company were sold in January for USD 28 million to Liberty Steel Group, leaving little for most of Bayou Steel's creditors.

Source :

Posted By : Yogender Pancholi on Fri, 22 May 2020
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