Standard Register creditor suit seeks damages tied to WorkflowOne deal

By Caroline Salls

Pittsburgh, June 9 – Standard Register Co.’s official committee of unsecured creditors filed a lawsuit Monday in connection with an alleged “strategy orchestrated by Silver Point Capital to obtain ownership of the debtors’ business,” according to a filing with the U.S. Bankruptcy Court for the District of Delaware.

The committee said Silver Point’s strategy was designed to “eviscerate hundreds of millions of dollars of unsecured claims, offload liability for the debtors’ underfunded defined benefit pension plan onto the [Pension Benefit Guaranty Corp.] and reap the resulting cash flow benefits entirely for itself at the expense of the debtors’ other creditors and stakeholders.”

Through its adversary proceeding, the committee said it, on behalf of the Standard Register estates, is looking to

• Avoid and unwind allegedly fraudulent transfers made and obligations incurred by some of the debtors in their largest acquisition ever “in exchange for ownership of their deeply insolvent competitor WorkflowOne in a lopsided transaction” in which the company received less than reasonably equivalent value and were left insolvent, undercapitalized and unable to pay their debts as they came due;

• Recover damages from Silver Point’s board of directors and some key officers for the breach of their fiduciary duties in approving the acquisition of WorkflowOne;

• Recover fees and transaction bonuses paid in connection with the WorkflowOne acquisition;

• Avoid liens on some of the company’s assets that were not properly perfected before the filing of its Chapter 11 Cases; and

• Obtain a judgment declaring that some of the Standard Register debtors’ assets were unencumbered before the Chapter 11 filing.

The creditor group said the relief it is seeking will substantially reduce the company’s obligations, preserve the value of unencumbered assets for the benefit of unsecured creditors, provide meaningful financial recoveries for the Standard Register estates and prevent Silver Point from obtaining all of the value of the business at the expense of the company’s other stakeholders, including unsecured creditors.

Standard Register is a Dayton, Ohio-based provider of business documents and related services for the health care, financial services, commercial and industrial markets. The company filed for bankruptcy on March 12 under Chapter 11 case number 15-10541.

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