Bottle maker Constar files third bankruptcy since 2008

Thu Dec 19, 2013 11:38am EST

* Company seeks sale of U.S. business for $68.5 million

* Liabilities are as much as $500 million

* Loss of PepsiCo contract has hurt company

By Tom Hals

Dec 19 (Reuters) - A privately held maker of plastic bottles, Constar International Holdings LLC, filed its third bankruptcy in five years on Thursday in a bid to complete the sale of the company.

Constar makes plastic food and drink containers at nine plants in the United States and Europe, but has been struggling since losing a contract with PepsiCo Inc at the end of 2012.

The company has been working to nail down a sale of its U.S. business to Amcor Rigid Plastics USA Inc for $68.5 million before it runs out of money, according to papers filed in the U.S. Bankruptcy Court in Wilmington, Delaware.

"Simply stated ... the debtors do not have sufficient cash resources to continue to operate the business," the Philadelphia company said in court documents.

Often a distressed company must file for bankruptcy before completing its sale because its debt obligations exceed the purchase price. Constar's proposed sale to Amcor will be subject to higher bids at a court-supervised auction, and the money raised will be used to pay Constar's creditors.

Constar said it had up to $500 million in liabilities. The company's largest shareholders are investment funds, including Solus Alternative Asset Management and Black Diamond Capital Management, that held its debt as it emerged from its previous bankruptcy.

The investment funds also hold some of the company's debt.

Constar previously filed for bankruptcy in 2008 and 2011.

It is at least the third company in recent months to join a small group of businesses that have filed for a third Chapter 11 bankruptcy, known to restructuring professionals as a Chapter 33.

Discount retailer Loehmann's filed on Monday for its third bankruptcy since 1999, and Global Aviation Holdings Inc filed for its latest bankruptcy in November.

A 2009 study by New York University professor Edward Altman found only 10 companies that filed for bankruptcy three times in a study that went back to 1984.

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