Catalyst Paper Seeks U.S. Bankruptcy Protection Amid Canada Reorganization
Catalyst Paper Corp. (CTL), a Canadian newsprint maker, sought bankruptcy protection from U.S. creditors requesting recognition of its main Canadian court proceeding.
The company, based in Richmond, British Columbia, sought bankruptcy protection under Chapter 15 of the U.S. bankruptcy code listing assets and debt of more than $1 billion, according to court documents filed yesterday in U.S. Bankruptcy Court in Wilmington, Delaware.
Chapter 15 of the bankruptcy code is used by foreign companies to protect their assets from creditors and shield them from lawsuits.
Catalyst reached an agreement with bondholders to be implemented under the Canada Business Corporations Act, which will cut debt by C$315.4 million ($310.6 million) while almost wiping out shareholders, according to a Jan. 14 statement.
Under the plan, holders of Catalyst’s senior secured and senior notes would own 99.5 percent of the company’s common shares. The remaining 0.5 percent would be held by holders of Catalyst’s existing common shares.
Catalyst would exchange $390.4 million of 11 percent senior secured notes due in 2016 for $325 million of new 11 percent first lien notes and 80 percent of the company’s common shares. Catalyst would also swap $250 million of 7.38 percent senior notes due in 2014 for 19.5 percent of its common shares, as well as warrants giving bondholders the right to buy more shares.
The case is In re Catalyst Paper Corp., 12-10221, U.S. Bankruptcy Court, District of Delaware (Wilmington).
To contact the reporter on this story: Michael Bathon in Wilmington, Delaware, at mbathon@bloomberg.net.
To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net.
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