Don't Let U.S. Steel Abscond with Billions!
Keep Stelco Producing!

People are amazed that a judge can rule so one-sidedly in favour of a company. CCAA Justice Wilton-Siegel decreed that U.S. Steel's equity interest in the former Stelco steelworks, gained through an ownership purchase in 2007 and increased with added injections of cash, is a debt to itself. This is significant, as Wilton-Siegel's decree under the authority of the Companies' Creditors Arrangement Act (CCAA) puts U.S. Steel in line to seize all of the money received when the Stelco steelworks are sold.

The people's amazement is well founded, as the decree makes no sense. But upon reflection, this is not the first time such an absurd ruling under CCAA has astounded almost everyone. In 2004, those who controlled Stelco at the time declared a "liquidity crisis" and a certain Justice Farley agreed to put the company under CCAA bankruptcy protection. The "liquidity crisis" soon proved to be a total farce, for immediately upon entering CCAA, Stelco managed two of its most profitable quarters. Of course, this did not stop Justice Farley from pursuing the CCAA fraud until 2006, when everything fell into place for a big score by a handful of parasites, including the debtor-in-possession Brookfield who had gained control of Stelco while under bankruptcy protection. The CCAA farce played out at the expense of steelworkers, retirees, salaried employees, shareholders, other creditors, the economy and surrounding community. The CCAA fraud did not solve any problems economic or otherwise but instead weakened Stelco allowing U.S. Steel to move in for a takeover one year later.

The Companies' Creditors Arrangement Act

The federal government introduced the CCAA during the economic crisis of the 1930s but it did not take off as a tool of powerful private interests until the 1980s, when the ruling imperialist elite unleashed the anti-social offensive to smash up all the arrangements from the post war period.

The CCAA court gained momentum allowing the powerful private interests controlling monopolies to liquidate their holdings with either minimal damage to themselves or even making big scores while attacking the interests of their workers, retirees, creditors, the community and economy. Monopolies that have used CCAA to further their private interests in opposition to the public interest include AbitibiBowater, Air Canada, CanWest, Kitco, Nortel Networks, Quebecor World, Sino-Forest Corporation, Stelco, and Target Canada amongst others.

In explanation of the CCAA, legal opinion suggests that its approach is not "rules based" but rather pragmatic, which according to the Supreme Court of Canada "provides a more discretionary approach that is remedial in nature, which therefore must be broadly construed."

The CCAA stated goal is "to facilitate compromises and arrangements between companies and their creditors." People note that the goal is not to solve the economic problems plaguing the company and sector and guarantee the rights and well-being of the workers and others involved. The aim opens up all previous arrangements to possible attack or "compromise" including even the rule of law governing pensions etc, and long-held and negotiated collective agreements. The stated CCAA goal is meant to negate any solutions to problems that may lead to a new pro-social direction for the company or sector and serve the public interest.

In most instances, the workers and retirees who through their work have produced all the value connected with the company under CCAA and whose lives depend on that work and value are reduced to "creditors" who may or may not be secured and compensated. The "creditors" are subject to the CCAA court's "broad discretionary approach and powers" to arrive at the declared goal. As U.S. pragmatism says, "Whatever works to meet the goal must be good or at least permissible."

Once the pragmatic approach is accepted, the rule of law, objectivity of consideration, a "rules based approach" along with modern principles and rights are thrown out the window. Whatever works means in practice that the most powerful private interests prevail as they set the goal. Needless to say, this takes Canada back to the medieval period when the ruling aristocracy simply declared what was in their private interests to be the accepted outcome of any dispute. During the depths of medieval depravity, one example of justice to terrorize the people and force them to obey the autocrats was to throw an accused in the river: if they drowned they were judged innocent; if they survived and made it to shore, they were judged guilty and executed.

Of course with the CCAA, more appropriate language is employed that softens the approach but the result is the same as in medieval times. The CCAA states in s. 11 that a court may "make any order that it considers appropriate in the circumstances" to meet the goal.

This was glaringly obvious during the 2004-06 Stelco CCAA case under Justice Farley when people noted that he seemed to be ruling by the seat of his pants, just making things up as he went along and decreeing any order he considered appropriate to meet the private interests of those in control and the goal they had set.

Wilton-Siegel is following Farley's notorious example. His decree declaring as debt to itself the money U.S. Steel used to purchase Stelco and any additional amounts disguised as loans is right up there with anything Farley ever did. Many have noted that a number of U.S. Steel's so-called loans to its wholly-owned subsidiary in Canada were made after CCAA bankruptcy protection had already been decided as the way to go. They suggest that the existence of these fairly recent so-called "revolver loans" to itself is proof of a criminal conspiracy well thought out in advance in preparation to enter CCAA. A conspiracy would involve using CCAA to avoid making the pension plans whole, absconding with the best customers, not repaying the loan to Ontario and not paying post-retirement benefits and municipal taxes, aside from the big bonus of having the $2.2 billion equity investment returned to the conspirators' coffers.

Hamilton Demonstration during first round of Stelco CCAA, February 27, 2004

People realize that CCAA is not like a court of law either a criminal or commercial court. In a criminal case for example, someone is accused of murder and the prosecutor presents evidence to prove the accused is guilty beyond a reasonable doubt. The defence presents evidence to refute the prosecutor's case and prove the accused is innocent. The judgement rests on the evidence presented.

That is not the scenario with the CCAA. The outcome has already been decided according to the broad aim of the CCAA and the narrow goal of the applicant's private interests as set out in their factum. The court process is merely to justify arriving at the goal. The powerful private interests that bring their case before the CCAA court have already decided the goal in advance, which is found in their presentation of a position within a court factum.

You can argue all you want and spend millions on lawyers but that will not change the outcome because essentially the CCAA process is merely to justify an outcome that has already been decided. Only broad exposure of the fraud in the court of public opinion will influence the outcome. Local 1005 found in the 2004-06 Stelco CCAA fraud that the best way to defend their pensions and their collective agreements was to refuse to participate. The steelworkers went to the court of public opinion and found broad support in the community for their position that the CCAA was a fraud and the CCAA court had no business tampering or interfering with their pensions and collective agreements that existed in law.

Local 1005 and others pointed out forcefully that the CCAA fraud would not lead to solving any problems at Stelco and would not assist in finding a direction for the Canadian steel sector that would put it on its feet. Stelco was badly wounded by the CCAA when assets were stripped and hundreds of millions of dollars were taken from the company by the parasites who had seized control. They sold the "new" Stelco to U.S. Steel for a big score of which none went into the pension plans or towards any renewal of the steelworks. U.S. Steel handed the parasites the money so that it could eventually eliminate a competing Canadian steel company especially given the economic crisis that erupted soon after in 2008.

Now U.S. Steel is using CCAA to declare its purchase and destruction of Stelco as a debt to itself so that it can scurry back to the U.S. with its most lucrative customers in tow and $2.2 billion in its pocket, all the while hoping that it has injured Stelco to the point it can no longer produce and compete.

The people led by steelworkers are determined not to allow this to happen and vow to defeat this CCAA fraud and keep Stelco producing with a new direction that addresses its problems and those of Canada's steel sector.

Down with the CCAA Fraud!
Keep Stelco Producing!

Note

The CCAA is not unique within the U.S.-led imperialist system of states. The global monopolies use a similar system to serve their narrow private interests in the U.S. and UK. The CCAA clone in the U.S. is called Chapter 11, and in the UK, Company Voluntary Arrangements (CVAs).

Coming Event

Hamilton Town Hall Meeting Against
Hospital Cuts, March 29

Tuesday, March 29 -- 7:00 pm
City Hall Council Chambers, 71 Main St. W.
Organized by Hamilton Health Coalition

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