NewPage Corp., the largest U.S. coated-paper maker, won court approval of its plan to reorganize and exit bankruptcy in the hands of its first-lien noteholders.
The company will leave bankruptcy with about $500 million in debt after shedding about $2.7 billion in obligations, the company’s chief executive officer, George F. Martin, said in an interview after the court hearing.
“Our company recognizes that we borrowed money that is not going to be paid back,” Martin told U.S. Bankruptcy Judge Kevin Gross in Wilmington, Delaware during the hearing. “We are going to make sure that when we get this second chance that we succeed.”
NewPage, based in Miamisburg, Ohio, filed for bankruptcy in September 2011, listing $3.4 billion in assets and $4.2 billion in debt.
Gross said he planned to sign an order approving the reorganization plan after the company and a group of creditors work out final wording. Approval of the plan is the last court action necessary before NewPage can exit bankruptcy.
The plan is based in part on a settlement with an official committee of unsecured creditors, who had disputed the company’s claims that since its $2.7 billion in secured debt exceeded the value of its assets, it could pay lower-ranking creditors nothing.
The committee began investigating whether a 2007 buyout that expanded the company and a 2009 refinancing could be challenged as so-called fraudulent transfers that harmed lower-ranking creditors, according to court records.
The settlement allows some lawsuits to go forward and settles other claims. Lower-ranking noteholders and some other unsecured creditors will split $30 million in cash and the first $50 million that might come from any lawsuits filed by a litigation trust, NewPage said in a statement in October.
During the bankruptcy, the company didn’t lay off any of its U.S. workers, focusing instead on its balance sheet. The company employs about 6,000 people, Martin said.
The case is In re NewPage Corp. 11-12804, U.S. Bankruptcy Court, District of Delaware (Wilmington).