FiberMark Withdraws Plan of Reorganization Due to Continuing Intercreditor Dispute Tuesday March 22, 8:29 am ET - - - Seeks Court Approval to Reinstate Exclusivity Period, Resolve Claims Trading Issues And Safeguard Estate Resources from Intercreditor Dispute Expenses- - Will File New Plan of Reorganization as Soon As Practicable
BRATTLEBORO, Vt., March 22 /PRNewswire-FirstCall/ -- FiberMark, Inc. (OTC Bulletin Board: FMKIQ - News) today announced that it has withdrawn its current Plan of Reorganization because its three largest bondholders, also members of the Creditors Committee, remain unable to resolve disputes among themselves relating to corporate governance and control issues involving the reorganized company. Despite the company's ongoing efforts to facilitate agreement on these normally routine Plan implementation matters, the bondholders again missed a Court deadline to take the actions necessary to permit confirmation of the Plan. Although the Plan submitted to creditors for approval in December was unanimously supported by the Creditors Committee, the three bondholder members of the Creditors Committee subsequently voted against the Plan due to intercreditor disagreements. Without the bondholders' resolution of these issues, their votes in favor of the Plan and the Creditors Committee approval of corporate governance and other implementation documents, the company cannot proceed with confirmation of its current Plan. ADVERTISEMENT
As a result, in an effort to move the chapter 11 process forward, FiberMark today filed motions with the U.S. Bankruptcy Court, District of Vermont, to expedite resolution of claims trading issues raised by certain bondholders and safeguard estate resources relative to the intercreditor dispute, as well as to reinstate the exclusivity period so that the company can formulate a new Plan of Reorganization that it believes could be confirmed.
Alex Kwader, chairman and chief executive officer of FiberMark, said: "This bondholder dispute has been extremely frustrating for us, particularly given the unanimous support for the Plan that we had received last December from the Creditors Committee, of which the three bondholders were members. In any case, we must move this stalled process forward, and today FiberMark has taken important steps in this regard. Going forward, building upon the significant progress made in developing the Plan that was filed in December, we will submit a new Plan that we hope will enable us to move quickly toward Plan confirmation. Although the delay is frustrating, we fortunately have more than adequate cash flow and access to working capital through our DIP facility in North America and in Germany through our revolving credit facility. Accordingly, we expect to continue meeting the needs-including fully meeting all post-petition obligations-of our customers and vendors and we appreciate their ongoing support."
While a number of variables will influence the timing of completion of the chapter 11 process, the company currently estimates that emergence could be delayed by six months. The company will file a new Plan of Reorganization as soon as practicable.