Wed 06/17/2020 14:51 PM
Relevant Documents:Voluntary PetitionCash Collateral MotionFiberCorr Mills
, a Massillon, Ohio-based corrugated cardboard products manufacturer, filed for chapter 11 protection today in the Bankruptcy Court for the Northern District of Ohio, along with affiliates Cherry Springs of Massillon II
, which owns FiberCorr’s real property, and Shew Industries
, FiberCorr’s parent. FiberCorr reports $1 million to $10 million in assets and $10 million to $50 million in liabilities. The debtors are represented by Anthony DeGirolamo
as counsel and The Phillips Organization
as financial advisor, each of which is based in Canton, Ohio. The jointly administered
case number is 20-61029. The case has been assigned to Judge Russ Kendig.
The debtors’ prepetition capital structure includes $5.9 million of secured debt owed to Home Savings Bank. The list of largest unsecured creditors consists solely of trade debt, led by Gateway Products Recycling Inc. with a $402,727 claim and Fosber America Inc. with a $293,906 claim. According to the cash collateral motion, the debtors estimate that FiberCorr’s collateral has an orderly liquidation value of approximately $7.8 million with respect to its equipment and vehicles and $964,966 with respect to accounts receivable, and the collateral owned by debtor Cherry Springs has an appraised value of $3 million.
The company attributes the bankruptcy to economic forces, including the impact of China importing significant quantities of raw materials from the U.S., which drove up raw material prices for FiberCorr, and increased competition from larger integrated paper companies. In response, the debtors pursued their own integration efforts that included the purchase and installation of a new corrugator at a cost of $8.5 million. The debtors say that the combination of installation costs and the cash required to fund the corrugator growth in sales has “consumed” FiberCorr’s available cash reserves. In addition, Home Savings lowered the debtors’ line of credit from $6.25 million on May 31, 2019, to $6 million by Dec. 31, 2019, “and $150,000 per month beginning January 2020.” Home Savings is unwilling to increase FiberCorr’s line of credit to fund its growth in business anticipated over the next 12 months, the company says in the joint administration motion
“FiberCorr’s liquidity crisis caused by the startup costs of the Fosber corrugator, the expense of funding the growth in sales for products from the Fosber corrugator, combined with the reduced line of credit from Home Savings cannot be solved by FiberCorr without protection in Chapter 11,” the joint administration motion continues.
FiberCorr’s equity is 100% held by Shew Industries, whose equity is in turn held 95% by three individuals and 5% by Independent Paper Board Marketing.
The debtors request
a first day hearing scheduled for Friday, June 19, at 1 p.m. ET.
Reorg First Day is monitoring this case and will provide further coverage as appropriate.