Pope & Talbot to convert bankruptcy case to Chapter 7 following DIP loan maturity

By Caroline Salls

Pittsburgh, May 9 - Pope & Talbot, Inc. has elected to convert its Chapter 11 bankruptcy case to Chapter 7 in light of the expiration of its debtor-in-possession financing, according to a Thursday filing with the U.S. Bankruptcy Court for the District of Delaware.

According to the filing, the company's DIP facility matured on May 5. Pope & Talbot said the DIP lenders were not willing to further extend the facility, but they did authorize the use of cash collateral until May 9.

"Without financing under the DIP facility and the use of cash collateral, the debtors do not have sufficient sources of working capital to continue operating their business," the company said in the motion.

As a result, Pope & Talbot said it is exercising its right to convert the case to Chapter 7 for liquidation.

The U.S. Trustee appointed George L. Miller as the interim Chapter 7 trustee on Friday.

Pope & Talbot, a Portland, Ore.-based pulp and wood products company, filed for bankruptcy on Nov. 19, 2007. Its Chapter 11 case number is 07-11738.

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