Tembec Industries seeks bankruptcy protection in US
NEW YORK, Sept 4 (Reuters) - A unit of Canadian forest products company Tembec Inc (TMB.TO) on Thursday filed for bankruptcy protection from U.S. creditors to implement a debt restructuring already approved in Canada.
Tembec Industries Inc filed for protection under Chapter 15 of the U.S. bankruptcy code with the U.S. bankruptcy court in Manhattan, a court filing showed. Tembec has more than $1 billion of both assets and debts, according to the filing.
Chapter 15 covers cross-border insolvencies and allows non-U.S. companies to reorganize outside the United States without having to face U.S. lawsuits and claims by creditors.
Though the Canadian proceedings involving Montreal-based Tembec covered various entities, only Tembec Industries sought Chapter 15 protection because it was the only entity with certain debt agreements covered by U.S. law, the company said.
Tembec sought to restructure its debt following what it called several significant business challenges, according to a court filing by Chief Financial Officer Michel Dumas.
He said these included the rising value of the Canadian dollar, soaring timber supplies following a mountain pine beetle infestation in British Columbia, lower demand for newsprint, and falling demand for lumber and other wood products as U.S. housing construction slowed.
Dumas said Tembec's ultimate goal is to implement a reorganization plan approved on Feb. 27 by the Ontario Superior Court of Justice, and that "to effectuate that goal, it is necessary that the plan be made binding and enforceable in the U.S."
Tembec shares closed down 87 cents at C$2.00 in Toronto. (Reporting by Jonathan Stempel)
