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Manistique Papers lender eyes conversion of Chapter 11 bankruptcy case
By Caroline Salls
Pittsburgh, Aug. 18 - Manistique Papers, Inc. lender RBS Citizens, NA asked the U.S. Bankruptcy Court for the District of Delaware to convert the company's Chapter 11 bankruptcy case to Chapter 7, according to a Wednesday court filing.
RBS said it did not consent to the company's use of cash collateral beyond the Aug. 26 expiration date.
"Under the circumstances, [Manistique] is not entitled to use cash collateral and has no economic means by which to administer its estate after August 26, 2011," the lender said in the motion.
In addition, RBS said all or substantially all of the company's assets, other than avoidance actions, are encumbered by the lender's pre-bankruptcy liens.
"Debtor simply has nothing of value to offer lender in consideration of the cash it needs going forward," RBS said in the motion.
"At this time, the case is not a reorganization or even an orderly wind-down or going-concern sale.
"This case is an orderly liquidation in the trust sense."
Specifically, RBS said Manistique is not conducting business and is only liquidating its assets to maximize value.
According to the motion, the company hopes to find alternate financing or a strategic transaction partner to allow it to restart operations before the cash collateral use runs out.
However, RBS said there is no real hope of Manistique becoming a going concern again or confirming a Chapter 11 plan if that does not happen.
The lender has requested an Aug. 25 hearing.
Manistique Papers, a Manistique, Mich., recycled fiber specialty paper producer, filed for bankruptcy on Aug. 12. Its Chapter 11 case number is 11-12562.
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