Bayou Steel files Chapter 11 bankruptcy after idling most operations

By Caroline Salls

Pittsburgh, Oct. 2 – Bayou Steel BD Holdings, LLC filed Chapter 11 bankruptcy Tuesday in the U.S. Bankruptcy Court for the District of Delaware.

President and chief operating officer Alton Davis said in a statement filed with the court that “the company has suffered under its debt load, which eventually led to severe liquidity issues,” and eventually led to default under Bayou’s ABL facility.

Although it held talks regarding a default forbearance, Davis said none could be reached. As a result of the default on the facility, the lenders began a daily sweep of the company’s bank accounts, leaving it with no liquidity to purchase raw materials and no credit terms remaining with its vendors.

“Left with no liquidity, and little hope of turnaround, the company determined not to purchase any further raw materials and, as it has done in the ordinary course of business in the past when faced with excess inventory or liquidity concerns, the company began selling off its finished goods inventory in order to pay down its secured debt,” Davis said.

Bayou also began discussions with its lenders regarding an orderly liquidation of its remaining inventory and assets through a Chapter 11 bankruptcy filing, conducted a reduction in force and idled most of its operations on Sept. 30.

Davis said the company will continue limited production to finalize finished goods over the next few weeks and will use the bankruptcy process to sell off the remainder of its inventory and attempt to sell substantially all of its remaining assets.

The company is seeking court approval to use the cash collateral of its pre-bankruptcy secured parties to fund its Chapter 11 cases.

According to court documents, Bayou has up to $50,000 in assets and $50 million to $100 million in debt.

The company’ largest unsecured creditors are Tokai Carbon GE LLC of Charlotte, N.C., with a $2.75 million trade claim; Tri Coastal Trading LLC of Houston, with a $1.59 million trade claim; and Alter Trading Corp. of St. Louis, with a $1.1 million trade claim.

No other unsecured creditors were listed with claims of $1 million or more.

The company is represented in its Chapter 11 proceedings by Polsinelli PC.

Bayou Steel is a Laplace, La., manufacturer of light structural and merchant bar steel products. The Chapter 11 case number is 19-12153.

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