Ormet, a Delaware corporation, recently went bankrupt and shuttered its facilities in Ohio and Louisiana. As part of the bankruptcy proceedings, Ormet agreed to sell its Ohio plant for $25 million. The Steelworkers Pension Trust, the union representing Ormet’s employees, tried to delay the closing on the theory that the deal approved by the judge improperly extinguished the Trust’s $5.5 million pension claim and that the Section 363 sale violated the Employee Retirement Income Security Act or the Multiemployer Pension Plan Amendments Act. The Trust lost.
According to the denial opinion, no cases from anywhere in the country deny a debtor the ability to sell assets free and clear of liability under Section 363 of the Bankruptcy Code. This is a good lesson for companies contemplating shutting down or going bankrupt. By filing bankruptcy, Ormet saved over $5 million it would have had to pay if it just shut down.