AbitibiBowater Inc. announced that the company and certain of its U.S. and Canadian subsidiaries, currently under creditor protection, have filed with courts in Canada and the United States a Debtors’ Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code and CCAA Plan of Reorganization and Compromise in draft form.
A classification scheme and resultant forms of recoveries for all company creditors is proposed in the plan. It specifies that non-disputed pre-petition secured, administrative, debtor-in-possession and other priority claims would be paid in full in cash, or satisfied as otherwise agreed, at emergence. Unsecured claims would receive a pro rata share of equity in the reorganized company upon emergence, subject to certain conditions. Details on the extent of recovery for unsecured creditors will be outlined in forthcoming disclosures. The plan also provides that the company’s current common stock will be cancelled and holders will receive no recoveries.
“The filing of these documents is an important step in AbitibiBowater’s creditor protection proceedings and a precursor to a key milestone we intend to reach in the near future with the filing of the plan’s disclosure documents and proxy materials,” said David Paterson, president and CEO. “While we recognize the consequences this plan outlines for our current common stockholders, this result was necessary in order to meet our overall obligations to creditors and effectively restructure for the future.”
Before emerging from creditor protection, the company must secure adequate exit financing and complete efforts to address labor costs and pension issues, as well as satisfy other conditions set forth in the plan. Prior to emergence, a new board of directors will also be designated for the company. The plan will ultimately require approval by the creditors and the courts.