UPDATE 1-Wellman says court approves reorganization plan

NEW YORK, Nov 14 (Reuters) - Wellman Inc WMANQ.OB, a polyester and plastics maker, said on Friday a U.S. bankruptcy court has approved its reorganization plan, and it can begin soliciting votes from creditors on the plan.

The company filed for Chapter 11 bankruptcy protection in February, citing deteriorating business conditions and substantial debt obligations.

Under the plan, the company's first and second lien debts will be converted into common stock of the reorganized company.

The first lien holders will receive 70 percent of the new company's common stock, and the second lien holders will receive 30 percent.

The company also expects to conduct a rights offering and use $90 million in cash proceeds to pay off the debtor-in-possession loans used to operate during bankruptcy.

Wellman said it would immediately begin the process of liquidating its remaining assets if it cannot raise the money from the offering, if the company's creditors do not accept the plan, or if administrative expenses and other claims exceed $28 million.

The company said in September it hoped to emerge from bankruptcy protection by the end of the year.

As part of its plan it will be getting out of the polyester staple fiber and engineering resins business and will consolidate some production facilities. (Reporting by Emily Chasan; editing by Jeffrey Benkoe)