Judge Allows Aluminum Maker Ormet to Raise Retiree Health Premiums

March 29, 2005 (PLANSPONSOR.com) - A federal judge has allowed aluminum maker Ormet Corp. to raise retiree health insurance costs, clearing the path for an exit from bankruptcy.

According to the Associated Press (AP), Judge Barbara Sellers ruled that the aluminum maker can raise monthly premiums by $340 for a couple and $640 for a family per month in order to cut retiree health costs by one-third, from $15 million to $10 million a year. Ormet has asked for $23 million in worker concessions to emerge from bankruptcy court.

However, Sellers also established the retirees as creditors who have the ability to make claims in the case for lifetime losses under the health plan changes, the AP reports. She also ruled in favor of the workers’ union on changes made to health coverage plans in 2003, a year before Ormet filed for bankruptcy. She ruled that the company was not allowed to modify such plans without retirees’ consent.

In an effort to get union and company officials to talk, Sellers also ordered that both sides meet for at least two days a week and make weekly progress reports to the court.

Sellers has previously allowed Ormet to break labor agreements with workers at two plants and impose new contracts so that it is able to leave bankruptcy. In this ruling, she rejected calls from employees at two plants in southeast Ohio who demanded that the company sell both plants. About 1,200 employees at the two plants went on strike on November 22; the company has been using salaried workers to keep the plants running.

Ormet officials were confident that Sellers’ ruling would clear the way for an exit from bankruptcy.“The court’s orders put to rest any uncertainty about Ormet’s future and should permit us to exit bankruptcy in the near future,” said Michael Williams, chief executive, according to the AP.