As LTV Steel faces bankruptcy, credit unions await next judicial move
CLEVELAND -Several credit unions are caught in the middle of an ugly battle to keep one of the largest steel-making plants in the nation from shutting down. Members employed by LTV Corp., the fourth-largest integrated steel maker in the nation who are served by at least four credit unions are...
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CLEVELAND -Several credit unions are caught in the middle of an ugly battle to keep one of the largest steel-making plants in the nation from shutting down. Members employed by LTV Corp., the fourth-largest integrated steel maker in the nation who are served by at least four credit unions are wondering how the company’s closing will affect making loan payments and getting checks cashed. On Dec. 4, an LTV Corp. executive told a federal bankruptcy judge that a $250 million guaranteed loan would not be enough to keep the company’s steel operations going and had asked for permission to shut down and sell off its assets. More than 7,500 employees at steel mills in Cleveland, Hennepin, Ill., and East Chicago, Ind., would lose their jobs. LTV has been under Chapter 11 protection since last December. At press time, Judge William Bodoh was in the process of taking more testimony as Ohio lawmakers scurried through an emergency plan that would provide LTV with $5 million in operating funds if Cleveland and Cuyahoga County would each provide an additional $5 million. Meanwhile, LTV Steel Salaried FCU in Cleveland will not cash checks from steel mill employees, according to a published report from WKYC’s Web site. For several days, the two telephone numbers to the credit union remained busy. LTV is Hennepin Steelworkers Credit Union’s sole sponsor serving 552 members and the past few weeks have been difficult, to say the least, said Toni Fusinatto, CEO/manager. “This saddens me,” Fusinatto explained. “Hopefully, through this difficulty we’ll learn how to face unforeseen challenges.” The tiny Illinois-based credit union which has two employees and $1.4 million in assets, does not offer checking accounts but does have outstanding loans of up to $25,000 which may be impacted if LTV shuts down for good. “We have received some requests on how will they be able to make loan payments and we certainly would make exceptional concessions considering what they’re dealing with,” Fusinatto said. Because the credit union receives a payroll check in one lump sum from LTV to distribute, concerns about honoring the check is not an issue, she added. “We’ve received enormous support and advice from the Illinois Credit Union League and our state examiners, and that helps,” Fusinatto said. Hoyt Lakes Community Credit Union started preparing for the LTV closing last year when the company announced its nearby mill would shut down this summer, said Don Werdick, president/CEO. Roughly 555 of Hoyt’s 5,100 members were laid off when the mill ceased to operate in May. Werdick said the credit union immediately sprang into action offering on-site counseling through the Consumer Credit Counseling Service and restructured loans that allowed for up to 180-day extensions. Payment of LTV checks were made, Werdick said. “Our affected members came to us right away,” Werdick recalled. “On the plus side, many were eligible for early retirement, so they chose to talk with representatives with our CUSO, CU Financial Services of Minnesota.” While Hoyt’s loan borrowing is down and delinquencies have increased from 1.68% last year to 3.27% this year, Werdick said the credit union is “well capitalized” at 15% net worth. Roughly 86 of Hoyt’s delinquent loans are LTV-related, being over 60 days late with $359,000 owed. In all, the credit union has $30.8 million in assets. The news is not all glum for the credit union located in Hoyt Lakes, a town of 11,000 in Northeastern Minn., Werdick said. Several companies have picked up where LTV left off, bringing more jobs and hiring many of the mine workers who Werdick said have, on average, at least two years of college. Delta Dental, a division of Blue Cross/Blue Shield and other large companies have moved into the area and while the “wages may be a lot less that what miners would earn,” the jobs have breathed new life into the town’s economy. “We have a pretty diverse membership base – public service, education, healthcare, transportation and retail -and this is area is primed for new jobs.” When contacted by Credit Union Times, a woman at Steel Valley FCU – another credit union serving LTV employees – offered “no comment,” saying the CEO was out of town. -
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