2011 Biggest Asset Bankruptcy wins Court Approval for Loan

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The biggest bankruptcy by assets for 2011 was filed last week by Miamisburg based NewPage Corp, the largest maker of coated paper in the country, listing $3.4 billion in assets and $4.2 billion in debts. NewPage applied and was granted approval by the bankruptcy court for a debtor-in-possession loan of up to $600 million to continue operations while it undertakes the restructuring of at least $2.6 billion worth of bonds. The company intends to borrow the money from JPMorgan Chase & Co. Lawyers for both sides have been busy hammering out the deal since US Bankruptcy Judge Kevin Gross said he would sign the approval granting NewPage the permission to borrow the money over the next few weeks.

The loan holds a provision where senior bondholders, who are owed $1.77 billion, are allowed to withdraw consent to let the company use cash being held as collateral. If that were to happen, the loan would be in default and NewPage would lose access to cash needed to operate. Although such an event is considered extremely remote by lawyers of both sides, nevertheless the loan agreement will allow the company time to come to court to resolve any dispute.

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Tampa Bay Bankruptcy Center, P.A. on:

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