Marcal Paper Mills' creditors committee objects to $121.6 million asset sale

By Reshmi Basu

New York, Nov. 15 - Marcal Paper Mills Inc.'s official committee of unsecured creditors objected to the company's proposed $121.6 million sale of substantially all of its assets to stalking horse bidder NexBank, SA, according to a Thursday filing with the U.S. Bankruptcy Court for the District of New Jersey.

The creditors committee accused Marcal Paper of designing a selling process with no intention of maximizing value for all parties in interest.

Specifically, the sale to NexBank, the second-lien credit facility agent, will leave very little, if any, cash to cover administrative costs, the committee said in the court papers, adding that "the proposed sale will leave the debtor a shell entity with numerous liabilities."

In addition, the creditors noted that the bidding procedures failed to provide enough time for prospective bidders to submit alternative offers.

As previously reported, the total purchase price under the NexBank agreement would be $121.6 million, including a $35 million credit bid to account for the amount Marcal owes under the second-lien credit facility.

Competing bids are due Dec. 12, and the auction will be held on Dec. 14, if necessary. The sale hearing is scheduled for Dec. 17.

A hearing on approval of the bid procedures is scheduled for Friday.

Marcal Paper Mills, an Elmwood Park, N.J., manufacturer and distributor of bath tissue, kitchen towels, napkins and facial tissue, filed for bankruptcy on Nov. 30, 2006. Its Chapter 11 case number is 06-21886.

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