The Stel Salaried Pensioners Organization wishes to thank The Hamilton Spectator for permission to post the following article by reporter Joan Walters published in the January 31, 2004 edition
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Jan. 31, 2004. 01:20 AM |
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Hard-nosed judge presiding over
restructuring |
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By Joan Walters |
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First there's the judge, this one a hard-nosed veteran who doesn't duck controversy and keeps complex court cases moving speedily along. Justice James Farley has been busy supervising Air Canada's insolvency court case for the past 10 months, recently approving a toughly negotiated $650-million rescue deal. Now his Ontario Superior Court chambers will fill with the corporate files, legal briefs and key players involved with Stelco. It was Farley who granted Stelco's request for court protection against creditors this week. And under the Companies' Creditors Arrangement Act, it will be Farley who has final say on whether all, some or none of the restructuring proposals to be made by Stelco are acceptable to the court. Stelco CEO Courtney Pratt and his turnaround expert Hap Stephen will already be working on meeting the act's first deadline -- a court appearance that must take place within 30 days . Stelco's is scheduled for Feb. 13. "That's so the court can get the idea of a general framework of what they are going to be trying to achieve," says Robert Harlang, of the Toronto restructuring consultant, Richter & Partners. It's also so that interested parties, such as unions or creditors, can take exception to things Stelco plans. The United Steelworkers will appear at the Feb. 13 court appearance to argue against Stelco's plan to avoid paying severance and termination to any laid-off employees while it restructures. "Clearly, we will also defend our collective agreements and defend our pensions. They are not for sale and they are not the problem," said Wayne Fraser, the union's Ontario-Atlantic director. He and national steelworkers director Lawrence McBrearty will be the primary advocates for Stelco workers worried about what's going to unfold. Fraser said the three Stelco local presidents will always be in the loop. "But for the first little while, I don't see too much happening," Fraser said. "Our first order of business is to meet as a team on Monday morning to talk about a strategy, see our legal advisers and get ready for all of this." All of this, as Fraser puts it, takes place under the watchful eye of another key player, a person known as the court-appointed monitor for the case. Harlang, the Toronto consultant, has been a monitor himself, including for the Eaton's bankruptcy in the 1990s. "In a way, it's a bit of a watchdog function," Harlang says. "To make sure everybody's interests are protected, to make sure the company doesn't just go off and do whatever it wants." The law requires appointment of an independent monitor, responsible only to the judge, to work with Stelco, its lawyers and accountants and all other interested parties -- including debt holders, bankers, and employees. The monitor -- in this case an Ernst & Young executive named Alex F. Morrison -- must be given access to all Stelco information. He in turn keeps the court up to date through regular reports. The front-end of a restructuring case like Stelco's can often create enormous friction, triggering conflict, Harlang says. "That's why it's good to have level-headed people at the centre while everybody is out for blood." It isn't clear how this case will go, though Pratt and Stephen are seen as a balanced team. Pratt's background before he became CEO in January included extensive human relations experience, a plus when employee relations are strained. Stephen, a turnaround expert retained in the fall, was officially named chief restructuring officer this week. His job is to create and execute the plan. The one-time president of Ernst & Young has twice guided Algoma Steel through court-protected restructuring and has been involved in other major Canadian business meltdowns. It will be an equally heavy load. Stephen will have to satisfy the expectations of the court monitor, creditors, the unions and other outsiders. Based on other cases, he will be negotiating constantly with all parties. "Everybody will be trying to jockey to make sure their interests are protected, as much as possible," Harlang says. "And every time they agree on something, somebody else is going to object, and then the court will have to give its blessing, so it can get tough." The final unknown in this case is the role of politicians and the impact of Harvard-educated lawyer James Arnett. Appointed this week as Premier Dalton McGuinty's special adviser on the steel industry, he was involved in Algoma's first restructuring as the Ontario government's legal counsel. He said only that McGuinty advised him that Stelco "is a matter of great concern" and the government wants to put a process in place for helping. jwalters@thespec.com 905-526-3302 |