Unsecured creditors' request for Wellman refinancing examination adjourned to June 17

By Rebecca Melvin

New York, May 15 - A hearing requested by Wellman Inc.'s official committee of unsecured creditors for oral examination and documentation of Wellman's pre-bankruptcy debt refinancing was adjourned to June 17 from May 15 at the U.S. Bankruptcy Court for the Southern District of New York.

The initial request included a general request for all documents relating to the company's 2004 refinancing. According to the motion, Wellman refinanced an estimated $375 million in outstanding debt on Feb. 10, 2004.

Information received from the company was unresponsive to most of the committee's requests for historical and current financial information, a supporting court document dated May 2 stated.

As previously reported, the committee said it has learned that at the time of the refinancing, Wellman's outstanding debt was primarily unsecured and was the obligation of Wellman and only a few of its subsidiaries.

However, after the refinancing transaction, the committee said the company's current secured lenders "imposed $675 million of secured debt upon Wellman's entire capital structure, including obligations for such debt upon all of Wellman's subsidiaries."

The committee said it believes that liens and guarantees granted in connection with the 2004 refinancing may constitute fraudulent conveyances because it has not been proven that Wellman's direct and indirect subsidiaries received any benefit from the incurrence of the secured debt.

The committee said this debt "likely rendered the subsidiaries insolvent."

Wellman, a Fort Mill, S.C., polyester products manufacturer, filed for bankruptcy on Feb. 22. Its Chapter 11 case number is 08-10595.

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