Pliant Corporation has reported that Judge Mary F. Walrath of the U.S. Bankruptcy Court for the District of Delaware approved all of the “first-day motions” that Pliant and its subsidiaries in the U.S. and Canada submitted as part of their filings for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Approval of these motions will help Pliant continue to operate in the normal course of business during its financial restructuring.
The Judge’s orders include approval of Pliant’s request to continue to pay employee salaries and provide benefits without interruption, to honor its commitments to its customers and to take other actions necessary to run the company with minimal disruption. Pliant also received interim approval to access debtor-in-possession (DIP) financing provided by GE Commercial Finance and Morgan Stanley Senior Funding, Inc. This financing will provide Pliant with additional liquidity and will be available to satisfy obligations associated with conducting the company’s business. Pliant will seek final authorization to utilize the DIP financing at a court hearing scheduled for February 2, 2006.
Pliant intends to use the Chapter 11 reorganization process to complete its previously announced financial restructuring, which would reduce debt by up to $578 million and annual interest expenses by up to $84 million. The company intends to file a plan of reorganization to implement the agreed restructuring in the near term. The holders of more than two-thirds of Pliant’s 13% Senior Subordinated Notes and the holders of a majority of its preferred and common stock have agreed to support the restructuring transaction and vote in favor of the plan of reorganization.