Packaging Group, a company calling itself the second-largest maker of vacuum-pouch bags in North America, has filed for creditors protection in Canada and closed production at a plant in Pennsylvania.
The Concord, Ontario, company filed for protection May 3 in the Toronto-based Superior Court of Justice and asked to submit a restructuring plan that could involve more plant closures or a sale, according to a court document. The filing, under the Companies' Creditors Arrangement Act, or CCAA, is similar to a Chapter 11 bankruptcy filing in the United States.
On May 9, Packaging Group President and Chief Executive Officer Francis Chantiam sent a letter to employees of the company's Gilbertsville, Pa., plant stating that the Pennsylvania plant would close immediately.
The closing was part of the company's restructuring plan, Chantiam said in the letter. He also said the court protection is ``necessary due to the severe impact the company experienced over the past 18 months from the rise in the Canadian dollar and significant increase in raw material costs.''
The firm extrudes, prints and converts polyethylene blown film into bags, mainly for food packaging, according to its Web site. It also produces roll stock, has about 200,000 square feet of manufacturing and can extrude more than 250,000 pounds of film a month.
Packaging Group has several subsidiaries in Canada, including Barrier Packaging Inc., Belcorr Packaging Ltd., Condor Co-Extrusions Inc. and J&J Bag Ltd. Its headquarters includes a 150,000-square-foot plant in Concord. During the years, Packaging Group has acquired other companies, including J&J Bag of Toronto in 2002.
The company's largest creditors include Canadian Imperial Bank of Commerce of Toronto, food-packaging producer Liquid-Box Corp. of Worthington, Ohio, and its owner, DuPont Canada Inc., according to a court filing. KPMG Inc. of Toronto was appointed to monitor the company during the CCAA protection.
Officials with Packaging Group and KPMG were unavailable for comment before deadline May 27.
The firm is expected to meet with the court June 2 to discuss other restructuring remedies, unless that date is extended.