YOUNGSTOWN, Ohio — An LTV Corp. executive told a federal bankruptcy judge Tuesday that a $250 million guaranteed loan would not be enough to keep the company's steel operations going.

        The company, in Chapter 11 protection since last December, has asked Judge William Bodoh to allow it to shut down and sell its steel assets because it no longer can afford to operate.

        The judge put off a decision Tuesday and said he would take more testimony today.

Steelworkers rally outside the courthouse in Youngstown, Ohio, as a judge considers whether LTV Corp. may cease operation. (Associated Press photo) | ZOOM |

        Judge Bodoh said he cannot decide whether LTV should close. He said he is ruling on the narrower point “of whether I should substitute my judgment for the company's judgment of how to proceed.”

        LTV Steel is the nation's third-largest integrated steel company, meaning it takes the metal from ore to scrap. The company produces about 5 percent of U.S. steel.

        A shutdown would affect mills in Cleveland; Hennepin, Ill.; and East Chicago, Ind.; 7,500 employees would lose their jobs.

        LTV executives Tuesday defended the proposal to shut down, a move that critics contend is premature.

        Thomas Garrett, LTV's chief financial officer, testified that the company was unable to come up with a restructuring plan that would satisfy the federal government's requirement for the loan guarantee.

        Negotiators for the United Steelworkers of America and the company's unsecured creditors reached agreement recently on a revamped contract meant to save the bankrupt company with the loan.

        Even with that agreement, “We were $326 million short of our revised budget plan,” Mr. Garrett said.

        Even if approved, the loan would not be enough, he said.

        In addition to other expenses, LTV would now need $130 million to restart its production line, and it lost $80 million in projected revenue when its last customers departed, Mr. Garrett said.

        He told Judge Bodoh that after the company filed its motion proposing that it shut down, customers took their business elsewhere.

        “We have no purchase orders,” said Mr. Garrett, who spent about three hours on the witness stand Tuesday.

        He acknowledged that if Judge Bodoh denies the company's request to shut down, LTV has no contingency plan for recruiting new customers.

        Attorneys for LTV's creditors, the city of Cleveland and other interested parties attacked parts of the plan, arguing that Judge Bodoh should reject it.

        Rep. Dennis Kucinich, D-Cleveland, pointed out that testimony shows LTV has $125 million in cash, more than enough to keep the company running and more than twice what the company expected to have at this time.

        But company spokesman Mark Tomasch said after the hearing that the $125 million is a result of preparing to shut down, cutting expenses and demanding final payments from customers. The money was never meant to run the company.

        LTV Corp., which controls LTV Steel, has been losing about $2 million a day since it filed for bankruptcy protection Dec. 29.

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