Smart Papers emerges from Chapter 11 bankruptcy

By Caroline Salls

Pittsburgh, Dec. 22 - Smart Papers, LLC emerged from Chapter 11 bankruptcy when its plan of reorganization took effect Thursday, according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The plan was confirmed on Dec. 19.

As previously reported, 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.

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.

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

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.

Creditor treatment

Treatment of creditors under the plan will include the following:

• 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;

• Holders of the International Paper claim will receive $630,000 of its $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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