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Bayou Steel Group Goes Bust

Oct. 1, 2019
The firm is shutting down a 400-man plant near New Orleans and its operations in Tennessee, effecting 72 more workers.

Bayou Steel Group filed for bankruptcy Monday, threatening hundreds of jobs after the company ran low on cash and defaulted on its debt.

The steelmaker idled most of its operations and sought Chapter 11 protection in Delaware, it said in a statement. Close to 400 workers may be impacted by the shutdown of Bayou’s plant near New Orleans, Natalie Robottom, a local government official, said.

The company sought protection from creditors after a “severe lack in liquidity” led to a default on its senior secured debt, according to the statement. Bayou, which produces steel products like reinforcing bars and beams, will offload its remaining inventory and sell its assets during bankruptcy.

Bayou Steel is “particularly vulnerable” to tariffs because it uses imported scrap metal, Louisiana Governor John Bel Edwards said in a statement following the layoffs. Scrap steel imports aren’t subject to tariffs implemented by the Trump administration, but the trade war with China has helped fuel a decline in the price of domestic steel products.

“Louisiana is among the most dependent states on tariffed metals, which is why we continue to be hopeful for a speedy resolution to the uncertainty of the future of tariffs,” said Edwards, who last year wrote a letter to President Donald Trump about the way tariffs would hurt Louisiana. “Meanwhile, we will do everything within our power to help those displaced workers.”

The company will also close its operations in Harriman, Tennessee, affecting 72 workers, according to a filing from the Tennessee Department of Labor.

Bayou listed liabilities of as much as $100 million in its bankruptcy petition.

The company did not immediately respond to a request for comment regarding the impact of tariffs on its business.

The case is Bayou Steel BD Holdings LLC, 19-12153, U.S. Bankruptcy Court for the District of Delaware.

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