Standard Register Co. on Friday had its first hearing in U.S. Bankruptcy Court for the District of Delaware after filing for Chapter 11 bankruptcy reorganization.
Standard Register filed more than a dozen motions seeking the court’s authority to pay critical vendors and employees, among other pleadings, to allow the company to continue its business operations under the court’s protection, according to court records obtained by the Dayton Daily News.
The Chapter 11 filing creates a distinction between the pre- and post-bankruptcy company, said Jeffery Morris, a retired University of Dayton law professor specializing in corporate bankruptcy. The company’s pre-bankruptcy liabilities aren’t supposed to be paid until a plan is approved to pay its creditors, but companies often seek such relief to retain vendors and employees.
“It’s getting authority to do things like have your professionals in place — the lawyers, accountants, investment bankers — to get authority to pay bills that otherwise you wouldn’t have a right to pay,” Morris said.
Standard Register appears to have a pre-packaged deal in place to keep the company operating through the process, said Lester Thompson, president of Thompson & DeVeny Co., a Dayton law firm with a focus in bankruptcy.
As part of Thursday’s bankruptcy filing, Standard Register signed a $275 million agreement to be acquired by an affiliate of Silver Point Capital L.P. The Dayton-based communication services company has lined up $155 million in financing for the sale process and to fund operations.
Thompson said the financing will be used to negotiate with the company’s creditors. “Silver Point has probably already got something in place with most of the creditors that are of any significance,” he said.
Morris said the next focus will be a sale of the company’s assets.
“Ultimately, the auction will be conducted and then from that point, the court actually would have a hearing to approve the sale. … If all goes as expected, then that (company), which is continuing to operate in Chapter 11, gets a new owner,” Morris said.