Newsprint manufacturer White Birch Paper files for bankruptcy protection in Canada and US

Birch Paper files for bankruptcy protection

TORONTO — Newsprint manufacturer White Birch Paper Co. has filed for bankruptcy protection, citing declining demand for newspapers and the strength of the Canadian dollar.

The company’s U.S. unit, Bear Island Paper Co. LLC, filed a Chapter 11 petition in Richmond, Va., Wednesday, listing assets of $100 million to $500 million and debt of $500 million to $1 billion in the court documents.

The parent company filed its papers in Quebec, under Canada’s Companies’ Creditors Arrangement Act (CCAA) in an attempt, it says, to preserve the value of its business and improve its capital structure.

The Canadian companies are also filing petitions for protection in the U.S. under Chapter 15, which deals with cross-border insolvency.

The second-largest newsprint manufacturer in North America is seeking approval in Canada and the United States for 140 million Canadian dollars ($131 million) in debtor-in-possession financing that it has already secured from lenders.

The company, which operates one pulp and paper mill in Ashland, Va., and three in Quebec, said it expects to continue operations as usual while it restructures under creditor protection.

“This process is about fixing our capital structure,” White Birch President Christopher Brant said in a release.

“The filing today is an important step toward ensuring White Birch’s future as a strong competitor with a healthy balance sheet.”

White Birch said it is currently in “productive” talks with its creditors and other stakeholders.

The filing comes at the culmination of a year of poor economic conditions that have significantly hurt the newspaper industry.

Toronto-based Fraser Papers sought bankruptcy court protection last June, blaming weakness in the pulp and lumber markets and a cash shortfall, and Canadian-American paper producer AbitibiBowater is also insolvent.

The president of Canada’s largest forestry union is blaming the Conservative government, saying it should have provided loan guarantees at commercial rates to prevent such companies from being forced into bankruptcy protection.

“Bankruptcy filings by this and other forestry giants could have been avoided at no cost to the government,” Dave Coles, head of the Communications, Energy and Paperworkers Union of Canada.