TORONTO-Plastics recycler Resource Plastics Inc. plans to pay unsecured creditors about 13 cents on the dollar in a restructuring plan. Certain shareholders of the privately held Brantford, Ontario, firm agreed to inject about C$300,000 (US$219,000) into the company to pay unsecured creditors and for working capital, President Doug Mathews said in a Jan. 23 telephone interview.
Creditors voted on the restructuring plan on Jan. 15 and more than 90 percent agreed to the deal, according to Wes Treleaven, senior vice president of Toronto-based Deloitte & Touche Inc., trustee for Resource.
A Feb. 6 court hearing will give a final ruling on the plan.
Mathews said Resource's shareholders wanted an outside party to buy the company and they announced that intention Sept. 29.
SCL Technologies, a Canadian company, agreed to acquire Resource, but SCL pulled out of the agreement Jan. 10 because it was not able to secure enough financing.
Resource management then scrambled to put together a new restructuring plan in time for a creditors' vote on Jan. 15. The C$300,000 cash infusion in the plan is similar to what SCL agreed to pay, said Mathews.
Resource faced automatic bankruptcy if it failed to come up with a creditor-approved plan by the middle of January. The shareholders believe it is a sound company ``and they couldn't afford to let it go,'' so some of them put up funds to keep it out of bankruptcy, said Mathews. Resource's earlier deadlines for filing a plan got court extensions.
Mathews did not disclose which of Resource's dozen shareholders will put up the C$300,000. These parties will obtain control of the film and bottle recycler, which was established in 1989. He and Treleaven also declined to provide details about SCL Technologies.
Unsecured creditors, including scrap and equipment suppliers, are owed about C$2.1 million, Resource stated when it filed last September for protection from bankruptcy while it restructured. Secured creditors, owed about $7 million, ``have confidence in the company'' and accepted the recent restructuring plan, Mathews said.
``I don't like it,'' Mel Temple, president of Exchange Plastics Corp., said in a telephone interview. ``But I had no choice except to take it because the majority [of creditors] accepted it.''
According to Akron, Ohio-based Exchange, Resource owes it US$4,788.
Resource will focus on profitability and continue with its core technologies in film and bottle recycling.
Mathews predicted the company will become profitable this year despite recent declines in recycled resin prices. It probably will reduce its work force as part of cost-cutting moves.