Delay in Bethlehem bankruptcy not good for Porter County
Resumption in tax payments depends on plan being filed

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By ROBIN BIESEN Times Staff Writer | Sunday, March 24, 2002 | (No comments posted.)

VALPARAISO - A plan for Bethlehem Steel Corp. to emerge from Chapter 11 bankruptcy has been delayed beyond July, leaving the county to question when, and if, the steelmaker will resume its real estate tax payments.

At a meeting of creditors Wednesday in New York, County Council Attorney David Hollenbeck said the news from Bethlehem's bankruptcy lawyers was not promising.

In a report from the county's bankruptcy lawyer, Henry Efroymson of Indianapolis-based Ice Miller Donadio & Ryan, Hollenbeck said the steelmaker's lawyers reported since filing for Chapter 11 bankruptcy protection Oct. 15, Bethlehem's losses have continued to mount.

"Since the company filed for Chapter 11, their losses have exceeded $200 million," Hollenbeck said. "The lawyers told those at the meeting of creditors that while they were certainly out there attempting to keep the business afloat, the company is giving equal attention to the possibility of entering into a joint venture with another company or finding a buyer."

As part of the bankruptcy filing, the company is required to file a plan detailing a timetable for repaying back debt while continuing to keep the steelmaker operational.

"It was our lawyer's opinion that it is highly unlikely that Bethlehem Steel will meet the deadline for completion of that plan by July 15 of this year," Hollenbeck said. "What that means for the county is more delay. The six years the company has to repay its pre-petition debt doesn't start until the plan is approved."

Debt incurred prior to the bankruptcy typically includes real estate tax payments.

Hollenbeck said Bethlehem Steel's lawyers said they believe the company is under no obligation to treat delinquent property tax payments any differently than their other obligations and offered no plan to pay any real estate taxes except as part of the plan, that will require approval by a New York bankruptcy court judge.

By the end of the year, it has been forecast Bethlehem Steel will owe 11 units of government in Porter County about $28 million in back taxes.

"This simply confirms the situation as we currently perceive it to be," Hollenbeck said.

Like Hollenbeck, Porter County Commissioner Larry Sheets said he wasn't surprised by the findings out of New York.

"There isn't too much that could be a surprise about Bethlehem right now," Sheets said. "I wasn't expecting that the county would be getting its money anytime soon."

Commissioners President David Burrus said he is more concerned about what the county does not know about the status of the steelmaker.

"I wonder if the county will recoup any of the money that is owed by Bethlehem Steel," Burrus said. "I think it is just as likely that the company will go the route of LTV Steel and change their Chapter 11 filing to Chapter 7 and we will never see a dime of what they owe the county now in property taxes."

Robin Biesen may be reached at biesen@howpubs.com or (219) 462-5151 ext. 349.

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