Carthage Specialty Paperboard Files for Bankruptcy

Carthage Specialty Paperboard (CSP) Inc., Carthage, N.Y., USA, has filed for bankruptcy protection after years of setbacks and a failed attempt to sell the company, as reported this past week by the Watertown Daily Times (WDT), Watertown, N.Y. According to documents filed in U.S. Bankruptcy Court for the Northern District of New York, DeltaPoint Capital Management LLC, Rochester, N.Y., owner of the mill, intends to continue operating the company as it attempts to reorganize under Chapter 11 bankruptcy protection.

 

 

"Ultimately, our primary goal is to make sure we sustain this business and set it up for long-term success," Michael Lambert, VP of sales and marketing for Carthage Specialty Paperboard, was quoted in the WDT article, which added that the filing shows that the company has about $31 million in liabilities versus an estimated $14 million in assets.

 

Reportedly, the manufacturer is "doing everything in its power" to avoid layoffs, but has issued a state Worker Adjustment and Retraining Notification (WARN) telling employees that the uncertainty of the situation may result in termination of employment. 

Lambert said the manufacturer hopes to reopen the plant and bring back its about 80 employees by March 11 or 18. Company management must acquire more raw materials such as fiber and chemicals to reopen the plant, but Lambert said they must receive permission from the court to purchase them, WDT reported. Carthage Specialty Paperboard executives have been trying to find a buyer to purchase the company since last fall. 

The company said Chapter 11 bankruptcy will give it some breathing space to continue to pursue a sale. "It is the company’s expectation that a deal with management or another buyer will be reached and the company can reconfigure and continue operations," CSP emphasized in a prepared statement.

Based on legal advice, the company issued the WARN notice to its employees in the event operations are not able to continue.

"The current owner doesn’t have the financial wherewithal to invest in the old mill," Lambert said in the WDT article, so the owner decided "to find a potential suitor that could make those commitments." The company plans to keep up its search for a potential buyer while working through the Chapter 11 process.

If the company doesn’t secure a purchase offer, management will create a buyout package for auction. Company managers have also offered to buy the business, WDT noted.  

"The management of the company is actively seeking, or participating, in an offer to acquire the assets," Lambert said in the WDT report. "We understand the business. We know what it takes."