Pacific Steel Casting Company, or PSC, which closed permanently in December of last year, filed for bankruptcy Jan. 25 and repaid loans and salaries to top company executives. It, however, did not pay out $845,746 in employee severance, as first reported by Berkeleyside.
Richard Hill, the attorney for PSC, told Berkeleyside that the company agreed to pay about 50 percent of what it owed in unpaid health and pension benefits to employees after settling a lawsuit with its pension fund in November, neglecting to pay in full because of dwindling funds.
“There isn’t money there to pay (the workers). It’s not as if the money is there, and they’re making the decision to spend it on something else,” Hill previously told The Daily Californian.
PSC, which was located in West Berkeley, was founded in 1934 and produced steel parts for vehicles as well as equipment for oil rigs. The company faced competition from Chinese auto parts, dropping demand for rigs and community pushback over environmental and working conditions.
PSC initially filed for bankruptcy in 2014 and was purchased by Speyside Equity, a private equity firm based in New York. A Chapter 7 bankruptcy filing showed that PSC has about $1.9 million in assets and $3.4 million in liabilities.
PSC repaid Speyside Equity, a creditor with secured claims, a $3.8 million loan. In addition, PSC was contractually required to pay PSC President Krishnan Venkatesan and Vice President Jerry Johnson $615,000 in salary, according to Berkeleyside. The union workers, however, only received $35,000 total in severance.
Speyside Equity maintains it does not have obligations to help with employee pension plans because it claims that the plans are a separate entity from PSC, according to Berkeleyside.
The bankruptcy filing also shows that the PSC site requires immediate attention because of contamination from polychlorinated biphenyls, toxic chemicals used as coolants and lubricants. At a November meeting, Berkeley City Council addressed the future of the property, which is among the largest in the manufacturing district — an area with the “highest asking rents across the East Bay market,” according to an offering memorandum.
“The matter is now in the hands of the Bankruptcy Court,” Hills said in an email when asked about the future of the workers and PSC.