Cincinnati Enquirer – A Greenwich, Conn.-based hedge fund today agreed to take over the assets and liabilities of Smart Papers LLC, which employs more than 400 here.
The purchase agreement, which still must be approved by the U.S. Bankruptcy Court in Wilmington, Del., came as Smart was about to be offered in a bankruptcy court-supervised auction.
The purchaser is an affiliate of Plainfield Asset Management Co., an investment fund created in 2005 by Max Holmes, the former head of distressed securities at D.E. Shaw & Co.
Holmes couldn’t be reached for comment Wednesday, but according to an outline of the deal filed in bankruptcy court, Plainfield agreed to file a reorganization plan by Sept. 6 for Smart, whichsought bankruptcy court protection in March blaming rising costs and the ill-timed acquisition of a Wisconsin paper mill.
Under terms of the Smart Papers proposal, Plainfield will assume the bankruptcy loans extended by Wachovia Bank, make a $5 million loan to Smart, contribute $5 million to Smart’s equity when the reorganization plan is approved, execute a payment plan with International Paper Co., which claims it is owed $3.8 million, extend a labor agreement with United Steelworkers Local 1967 for one year and create a self-liquidating trust for unsecured creditors that will have a 7.5 percent stake in the reorganized company.
