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Marcal Paper committee seeks asset sale recovery for unsecured creditors
By Caroline Salls
Pittsburgh, Jan. 8 - Marcal Paper Mills, Inc.'s official committee of unsecured creditors objected to the proposed sale of the company's assets to NexBank SSB, arguing that the sale disposes of substantially all of the company's assets without the protection of a plan of reorganization and that it does not benefit unsecured creditors.
NexBank, the stalking horse bidder for the proposed asset sale, is also Marcal's second-lien credit facility agent.
"The current structure allows the debtor's secured creditors to use the bankruptcy court as a foreclosure court," the committee said in the objection filed Monday with the U.S. Bankruptcy Court for the District of New Jersey.
In addition, the committee said NexBank has "skewed the playing field for competitive bidding, chilled bidding and improperly manipulated the flow of information and transparency of the due diligence process to the disadvantage of other potential bidders."
As a result, the committee said NexBank should not be allowed to credit bid, and it is not entitled to be classified as a good faith purchaser.
According to the objection, the committee believes that a sale should only be approved if the successful bid provides enough cash to pay all administrative and priority claims as part of a Chapter 11 plan, provides enough funding for the plan process and the expenses that will accrue during the wind-down period and provides a meaningful recovery for unsecured creditors.
The committee also said that, in this case, bidders should provide an investment opportunity in the purchaser for interested unsecured creditors.
The sale hearing is scheduled for Jan. 15.
Marcal Paper Mills, an Elmwood Park, N.J., manufacturer and distributor of bath tissue, kitchen towels, napkins and facial tissue, filed for bankruptcy on Nov. 30, 2006. Its Chapter 11 case number is 06-21886.
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