Smart Papers files plan of reorganization; Plainfield to get 92.5% of new common stock

By Caroline Salls

Pittsburgh, Oct. 31 - Smart Papers, LLC filed its plan of reorganization and related disclosure statement Tuesday with the U.S. Bankruptcy Court for the District of Delaware.

Under the plan, substantially all of the company's assets that remain following the sale of the assets of its PF Papers business operations will be transferred to the reorganized company on the plan effective date.

Also, 92.5% of the company's new common stock will be issued to plan sponsor Plainfield Special Situations Master Fund Ltd. in satisfaction of $5 million of its secured claim, and the remaining 7.5% of new common stock will be issued to a creditor trust.

As previously reported, Plainfield has purchased $27.91 million of the company's Wachovia debt, plus interest.

Plainfield has also agreed to make an additional $7.3 million in tranche B revolving loans available to the company.

Reorganized Smart Papers will pay the balance of Plainfield's secured claim in cash from an exit facility.

The creditor trust assets, which will include $200,000, the creditor trust shares, excluded causes of action, membership interests in the reorganized company and any excluded assets that the official committee of unsecured creditors decides to transfer to the trust, will be distributed to holders of general unsecured claims.

Treatment of creditors under the plan will include:

• Holders of general unsecured claims will receive their share of the creditor trust interests, and the creditor trustee will liquidate the remaining creditor trust assets and make cash distributions to holders of creditor trust assets;

• Plainfield will receive 92.5% of the new common stock in the reorganized company and cash from Smart Papers' exit facility;

• Holders of the International Paper claim will receive $630,000 of the $1 million claim. In addition, the International Paper $1.03 million claim will be secured by junior liens, and by June 30, 2007, reorganized Smart Papers will pay International Paper the full amount of that claim, plus 8% interest; and

• Holders of subordinated claims and old membership interests will receive no distribution under the plan.

Smart Papers, a Hamilton, Ohio-based paper manufacturer, supplier and marketer, filed for bankruptcy on March 21, 2006. Its Chapter 11 case number is 06-10269.

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