When will Verso emerge from Chapter 11 bankruptcy?
Earlier this year, the paper mill owner Verso Corp. filed for bankruptcy. The Tennessee based company, which owns mills in Wisconsin Rapids and Steven Point, has been plagued by a sharp decline in the demand for coated paper. Now, the company’s Chapter 11 reorganization plan has been confirmed by the US Bankruptcy Court.
Verso’s plan will reduce the company’s debt load by almost $2,4 billion when it emerges from bankruptcy – possibly by the end of July. The company is being supported by $595 million in “exit financing” in the form of an asset-based lending facility being arranged by Wells Fargo and Barclays Bank. The company’s reorganization reportedly had “overwhelming support” of creditors, and by eliminating the debt, it hopes to remain viable in the contemporary global marketplace.
Verso believes the support of the creditors is a vote of confidence for the company’s prospects and that it will achieve a sustainable financial future.
“Verso is extremely pleased with this speedy and successful outcome,” said President and CEO David Paterson. “Our smooth path through this critical step in the restructuring process would not have been possible without the strong support of our [creditors].”
In addition, the reorganization plan will not lead to any changes in the company’s operating strategy, and the provisions under collective bargaining agreements with respect to wages and salaries and other benefits will remain intact. The company also intends to offset its losses arising from the decline in demand for coated paper by making strategic investments that will enable it return to profitability.
That being said, it remains to be seen whether Verso will be forced to close plants as part of the reorganization plan or if the plan does not right the ship.
While this bankruptcy is exceptionally large, given the fact that $2.4 billion in debt is being eliminated, Chapter 11 is also designed for smaller businesses as a means to protect the assets provided there is a sound plan to become profitable in the future. If you have questions about reorganizing your business, you should speak to an experienced bankruptcy attorney.