AbitibiBowater (“AbitibiBowater” or “Debtor”), one of the largest newsprint producers in the world, filed for bankruptcy in the United States Bankruptcy Court for the District of Delaware on April 16, 2009.  According to AbitibiBowater’s bankruptcy petition, the Debtor has assets totaling $9.9 billion.  Based in Montreal, Quebec, AbitibiBowater owns 24 pulp and paper facilities and 30 wood products facilities in the United States, Canada, the United Kingdom and South Korea.  As stated in its Declaration in Support of Bankruptcy Motions (the “Declaration”), AbitibiBowater employs over 15,000 people worldwide.

Events Leading to Bankruptcy

According to its Declaration, demand for AbitibiBowater’s newsprint experienced an “unprecedented decline” due to the recent downturn in the global economy.  Besides weak demand for its print products, AbitibiBowater’s business was negatively affected by increased competition, volatility in paper prices and a continued decline in the advertising industry.  Add to this high debt levels and a lack of liquidity and bankruptcy became the only viable option for this Debtor.

AbitibiBowater’s Debt

AbitibiBowater’s debt totals $6.0 billion, $1.1 billion of which is secured.  According to its bankruptcy petition,  AbitibiBowater lists its largest trade creditors as follows:

  1. Dow Chemical … $3.6 million
  2. Shell Canada Products … $3.3 million
  3. McBurney Power … $3.1 million
  4. Minis. Des. Ressources … $2.3 million
  5. Imerys Canada … $2.3 million
  6. Metso Papier … $1.5 million
  7. FP Innovations … $1.3 million
  8. Reseau C.B. … $1.3 million
  9. Clow Darling Ltd. … $1.2 million
  10. Ville De Saguenay … $1.2 million

AbitibiBowater hired Blackstone Advisory Services to help it obtain debtor-in-possession financing during its bankruptcy proceeding.  As part of its initial bankruptcy filings, Debtor filed a motion to approve debtor-in-possession financing.  Through the motion, Debtor seeks approval of a $206 million loan with Fairfax Financial Holdings Ltd.