Wellman hearing on creditors' request for examination of 2004 refinancing adjourned to Aug. 5

By Jennifer Lanning Drey

Portland, Ore., July 15 - Wellman Inc. and its official committee of unsecured creditors have agreed to delay to Aug. 5 the hearing on the committee's request for oral examination and documentation of Wellman's pre-bankruptcy debt refinancing, according to documents filed with the U.S. Bankruptcy Court for the Southern District of New York.

The hearing has now been adjourned three times since its originally scheduled date of May 15 under a standstill agreement between the creditors' committee and the company.

The parties plan to continue to negotiate during the standstill period to consensually resolve the issues raised in the committee's motion for examination, according to a court filing.

As previously reported, the creditors committee's initial request included a general request for all documents relating to the company's Feb. 10, 2004 refinancing when Wellman refinanced an estimated $375 million in outstanding debt.

The committee said previously that it had 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.

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

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.