FiberMark's exclusivity terminated, examiner to be named

By Caroline Salls

Pittsburgh, April 19 - FiberMark, Inc.'s request to reinstate its period of exclusivity to file a plan of reorganization was denied Tuesday by the U.S. Bankruptcy Court for the District of Vermont.

The exclusivity period expired on Feb. 15. The motion to extend the period requested that the court establish procedures for filing competing plans of reorganization.

As she had previously indicated, judge Colleen Brown also ordered the U.S. Trustee to appoint an examiner to the case.

She said no proposed plans of reorganization or disclosure statements may be filed during the examiner's 45-day investigation period, except plans agreeable to the company and the creditors.

FiberMark has until Aug. 8 to file proposed disclosure statements and a plan of reorganization.

As previously reported, the examiner will investigate whether the screening order barring the use of confidential information in trading has been breached, whether FiberMark or its employees have committed irregular conduct and any other allegations that the court asks the examiner to look at.

In March, FiberMark pulled its reorganization plan because its creditors were unable to resolve their dispute. In addition to SilverPoint, the committee includes AIG Global Investment Corp. and Post Advisory Group, LLC.

AIG and Post have been objecting to the plan of reorganization because they believe it gives SilverPoint too much freedom at the expense of their rights - and claim the plan does not reflect what they say was included in an earlier negotiated agreement.

In addition, a dispute has erupted over SilverPoint's trading of claims, which has put in the position of being FiberMark's biggest creditor with more than 50% of its notes.

AIG and Post are claiming that SilverPoint violated court-approved procedures for separating its trading area from its role on the creditors committee.

AIG and Post are also alleging impropriety in SilverPoint's purchase of claims from employees and management.

FiberMark, a Brattleboro, Vt., producer of specialty fiber-based materials, filed for bankruptcy on March 30, 2004 in the U.S. Bankruptcy Court for the District of Vermont. Its Chapter 11 case number is 04-10463.

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