May 25, 2010 6:42 PM
With Shareholders Okay, Smurfit-Stone Set to Exit Bankruptcy Posted by Brian Baxter
Chicagoans know the city's Smurfit-Stone Building as both a feminist icon and billboard for local pro sports teams in the playoff hunt. And now, they know that the Windy City-based company that is its namesake, Smurfit-Stone Container Corp., is poised to exit Chapter 11.
Reuters reports that after an agreement on Monday to redistribute 2.25 percent of stock in a reorganized Smurfit-Stone to shareholders owning prebankruptcy preferred shares--as well as handing the same percentage in the reorganized company to holders of the debtor's old common stock--the container maker could be leaving bankruptcy behind at a time when demand for its cardboard boxes is high. (They come in handy, for instance, when cleaning out one's desk.)
For the past several months, Smurfit-Stone shareholders have been battling the company in bankruptcy court in Delaware, where they are opposing the debtor's proposed reorganization plan. Reuters reports the latest deal will see Smurfit-Stone abandon its plan to give its stock to unsecured creditors and leave nothing for former shareholders. The new plan will dilute the potential recovery for bondholders, but a lawyer for the company's unsecured creditors committee told Reuters that it was in everyone's best interest to move forward.
"We felt it was an appropriate way to proceed to get the company out of bankruptcy as soon as possible," said Kramer Levin Naftalis & Frankel corporate restructuring cochair Thomas Moers Mayer. (The firm is advising the committee along with bankruptcy boutique Pachulski Stang Ziehl & Jones.)
Added Willkie Farr & Gallagher restructuring partner Rachel Strickland, an attorney representing holders of preferred Smurfit-Stone stock: "As a result of [shareholders'] efforts, the debtors were compelled to update their projections and recognize the value that belongs to shareholders."The Smurfit-Stone bankruptcy has been a lucrative assignment for the company's bankruptcy counsel. Court filings show that Sidley Austin has billed Smurfit-Stone for more than $12.8 million in fees and expenses since the beginning of the company's Chapter 11 case on January 26, 2009.
Sidley Austin reorganization cochair James Conlan ($950 per hour), bankruptcy partners Matthew Clemente ($725) and Dennis Twomey ($675), and restructuring associate Bojan Guzina ($650) are leading the team from the firm advising Smurfit-Stone in bankruptcy proceedings. Delaware firm Young Conaway Stargatt & Taylor is serving as local debtor's counsel.
Sidley's Clemente and Twomey did not immediately respond to a request for comment.
Earlier this month a Canadian court approved a bankruptcy exit plan for Smurfit-Stone. Stikeman Elliott is serving as the company's Canadian counsel.
'Courts of bankruptcy are essentially courts of equity, and their proceedings inherently are proceedings in equity.'
