October 1 − Bayou Steel BD Holdings, L.L.C. and two affiliated Debtors (“Bayou Steel Group” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the District of Delaware, lead case number 19-12153. The Debtors, producers of long carbon steel products owned by private equity house Black Diamond Capital Management ("Black Diamond"), are represented by Christopher A. Ward of Polsinelli PC. Further board-authorized engagements include (i) Candlewood Partners, LLC as financial advisor and (ii) Kurtzman Carson Consultants as claims agent.
The Debtors’ lead petition notes between 5,000 and 10,000 creditors; estimated assets between $50.0mn and $100.0mn; and estimated liabilities between $50.0mn and $100.0mn. Documents filed with the Court list the Debtors’ three largest unsecured creditors as (i) Tokai Carbon GE LLC ($2.7mn trade claim), (ii) TRI Coastal Trading ($1.6mn trade claim) and (iii) Alter Trading Corporation ($1.1mn trade claim).
In a press release announcing the filing, the Debtors stated: "On October 1, 2019…[the Debtors] conducted a reduction in force, idled most of its operations, and filed for protection under chapter 11 of the Bankruptcy Code. This unfortunate situation was created by a severe lack in liquidity at the Company, which resulted in a default with its senior secured lender, and created a situation where the Company could no longer purchase raw materials. The Company will continue to engage in limited production to finalize finished goods over the next few weeks and will use the bankruptcy process to sell off the remainder of its inventory and attempt to sell substantially all of its reaming assets via section 363 of the Bankruptcy Code to a strategic or financial buyer that will hopefully re-start operations."
Local news sources are reporting that the Debtors' LaPlace, Louisiana steel mill has been shuttered and almost 400 workers abruptly laid off. The Louisiana Workforce Commission stated that it first received notice of the closure on Monday (September 30, 2019).
In a statement on the closure, Gov. John Bel Edwards (D) blamed the Trump Administration's trade war with China: "While Bayou Steel has not given any specific reason for the closure, we know that this company, which uses recycled scrap metal that is largely imported, is particularly vulnerable to tariffs."
In April of 2016, Black Diamond purchased the Debtors from ArcelorMittal, world's leading steel and mining company. Terms of the transactions were not disclosed. ArcelorMittal had purchased the Debtors from Black Diamond on 2008.
About the Debtors
Bayou Steel Group is an independent company that produces long carbon steel products in North America. The Debtors, headquartered in LaPlace, LA, have additional operations in Vinton, TX and Harriman, TN as well as three finished inventory depots in Tulsa, Chicago and Pittsburgh. Bayou Steel Group manufactures a broad range of merchant bar shapes, including equal and unequal leg angles, flats, rounds, squares and channels, as well as standard and wide-flange beams. The company also specializes in rebar production for the commercial and industrial construction industry and grinding balls for the mining industry.
The Debtors describe themselves as follows: “Bayou Steel Group was formed in 2016, but our history goes a long way back. Operations in our LaPlace headquarters began in 1979, right here on the Mississippi River, with the goal to transport raw materials and semi-finished and finished goods. We now operate a modern melt shop, in-line rolling mill, scrap-processing facility and shipping and receiving dock. In 1995, we added our Harriman location, an extension of LaPlace with rolling and distribution operations. Through the years, our locations have continued to produce high-quality steel products. Strong, nimble, proud."
Read more Bankruptcy News
The post Bayou Steel BD Holdings, L.L.C. – Private Equity-Owned Long Carbon Steel Producer Files Chapter 11 and Shuts Steeel Mill as Fingers Point at US-China Trade War appeared first on Daily Bankrupt Company Updates | Bankrupt Company News.