Libbey Bankruptcy - June 11, 2020
As most of you are aware, on June 1, 2020, Libbey filed for bankruptcy under Chapter 11 of the Federal Bankruptcy Code.
The ultimate goal in any Chapter 11 bankruptcy case is the development of a Plan of Reorganization ("POR") that includes new financing, a future business plan/ model and a plan to re-pay the company's creditors and lenders.
The company has sought court approval of Debtor in Possession ("DIP") financing from a group of its existing lenders who appear to have a desire to own the company after its successful reorganization.
TIMELINE:
The proposed DIP financing imposes upon Libbey strict timelines for completing various tasks in the case, including:
- Obtaining court approval of its POR within 105 days of its filing on June 1, 2020, or mid-September.
- Requiring management to obtain concessions from the unions representing Libbey's employees within 90 days of the bankruptcy filing, or by the end of August.
BARGAINING A FAIR RESOLUTION
The proposed DIP provides that if the parties are unable to negotiate a resolution, Libbey must go to the Bankruptcy Court and seek approval under Sections 1113 and 1114 of the Bankruptcy Code to implement its changes.
Libbey met with our union in both Toledo and Shreveport on June 2, 2020, and presented proposals that would reduce overall labor costs by more than 20%. The company proposal would reduce the standard of living of both active workers and retirees.
What happens if we are unable to reach new contracts by September 15th?
Within the bankruptcy law, there are provisions for the company and its lenders to file a motion in court (section 1113) to vacate our contracts and impose their view of an acceptable contract as part of their POR.
We can oppose the section 1113 motion in court, and the USW has done so in many other cases over the years. A court-ordered rejection of our labor agreements will give us the right to strike.
Still, our best chance of achieving an outcome that works for the members and retirees we represent is to engage seriously in bargaining.
OUR FACILITIES, OUR JOBS, OUR FUTURE
Our best strategy is to determine for ourselves the nature of Libbey's financial situation and bargain accommodations allow the Company to become a viable and sustainable company into the future, while allowing our members and retirees to share in improvements in the business.
Any tentative agreement will be need to be ratified by the membership and in the short term may mean reductions in wages and benefits, but if successful, it will result in future employment security, earnings security and retirement security for the membership and their families.
The USW has told many companies through the years - and we will tell Libbey the same - that no company should try to reorganize its business on the backs of its workers and retirees.
READY TO BARGAIN, PREPARED TO FIGHT
The International Union has assigned knowledgeable and experienced staff to the Libbey bargaining committees, including Attorneys and Technicians, and we have engaged an outside bankruptcy legal firm and financial advisors to assist in the process.
We have presented the Company with a comprehensive information request so that we may be as informed about the overall financial picture at Libbey as every other key stakeholder in the bankruptcy.
It is our intention to coordinate bargaining between the locals and to play a meaningful role in the development of the Plan of Reorganization.
We will do our best to keep you informed and up to date as we move through this process. Your solidarity and support for your bargaining committee is our best leverage in our ability to achieve an equitable solution.