Friday, August 11, 2000

Cincinnati Cordage seeks sale amid bankruptcy

By Mike Boyer
The Cincinnati Enquirer

        Cincinnati Cordage & Paper Co., a paper and packaging distributor, is pursuing sale of the 108-year-old business as part of a Chapter 11 bankruptcy reorganization.

        The company, which employs 200 at nine Midwest locations, filed for protection from creditors Aug. 1 in U.S. Bankruptcy Court in the face of a cash-flow crisis. A Chapter 11 filing allows a company to continue to operate with protection from creditors while it attempts to develop a repayment plan.

        The company, which had revenues last year of $130 million, reported assets of $32.8 million, at the end of last year, and debts totaling $34 million, according to court filings.

        The company's list of creditors includes some of the nation's largest paper manufacturers, such as International Paper, Georgia Pacific and Champion International, recently acquired by IP.

        “The company has experienced cash flow problems for the last few years,” said Edmund Adams, a lawyer with Frost & Jacobs, which is handling the closely held compa ny's bankruptcy filing.

        “There's been an erosion of (profit) margins, higher costs, lower price levels due to the forces of competition and a shrinking commercial printing market,” he said. “That's been exacerbated by (industry) consolidation.”

        Before seeking court protection, Cincinnati Cordage was negotiating sale of the business to Millcraft Paper Co., according to court filings. Mr. Adams said he couldn't comment on those negotiations, but said asset sales are an option for the business.

        Bankruptcy Judge J. Vincent Aug Jr. has approved continued operation of the business and interim bankruptcy financing.

        A final hearing on up to $18.5 million in bankruptcy financing provided by CIT Group/Business Credit Inc., Cincinnati Cordage's pre-filing lender, is slated for Aug. 24 before Judge Aug.

        The judge is also expected to hear objections from the U.S. Bankruptcy Trustee's office on the appointment of Frost & Jacobs as bankruptcy counsel.

        James S. Wachs, a senior partner at Frost & Jacobs, resigned July 17 as assistant secretary and director of Cincinnati Cordage. The trustee argues that relationship is contrary to bankruptcy code provisions that paid professionals be “disinterested persons.”


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