RG creditors seeking permission to sue for breach of duties

RG Steel’s unsecured creditors are seeking a federal bankruptcy judge’s permission to sue the now-defunct company’s billionaire owner for breaching his fiduciary duties.

The motion, filed late Thursday in U.S. Bankruptcy Court in Delaware, seeks the court’s blessing to pursue allegations that billionaire Ira L. Rennert delayed the bankruptcy filing by as much as five months in order to protect his own financial interests as well as those of RG Steel’s parent company, the Renco Group, which he also owns.

The motion also alleges Rennert persuaded a major lender to delay drawing down Renco’s cash collateral “until the last possible moment, and even then only in the smallest possible amount,” directly reducing the amount available to repay outstanding obligations and claims a conflict of interest on the part of the official debtor’s committee “compromises the Debtors’ ability to pursue … claims (against Rennert) in an effective manner.”

“As such, unless the committee is granted standing to pursue the Rennert claims, these valuable claims will not be prosecuted and any potential benefit there from will be lost. It is therefore crucial that the committee be granted standing to pursue the Rennert Claims on the Debtor’s behalf,” the motion reads.

The unsecured creditor’s group hopes to recover in excess of $236 million, the motion indicated.

A hearing has been scheduled for 1:30 p.m. Feb. 14 in the bankruptcy court.