Goldberg Kohn Represents Home Products International in Bankruptcy Reorganization Cases
Home Products International (HPI) – a leading designer, manufacturer, and marketer of a broad range of high-quality, consumer products – received all relief requested in the first-day hearing of the Chapter 11 cases filed in the U.S Bankruptcy Court for the District of Delaware. The global manufacturer is represented by the Chicago-based law firm, Goldberg Kohn.
On the first day of the cases, the companies also filed their plan of reorganization, the hallmark of which is that general unsecured creditors would be unimpaired and paid in the ordinary course of business. In addition, $116 million in senior subordinated high yield debt would be converted to equity, with the noteholders receiving 95 percent of the new HPI stock and the old HPI stockholders receiving 5 percent of such stock. The approach has the support of a majority of the HPI noteholders and HPI's majority shareholder. The companies will seek approval of the restructuring plan as soon as permitted under the Bankruptcy Code.
Ronald Barliant, a former bankruptcy judge and a current partner in Goldberg Kohn’s Bankruptcy & Creditors’ Rights Group, and Kathryn Pamenter, counsel for Goldberg Kohn’s Bankruptcy & Creditors’ Rights Group, are leading the representation. Ms. Pamenter conducted the first-day hearing, during which HPI obtained court authorization to obtain $60 million in debtor-in-possession financing and to pay trade creditors' pre-petition claims if they offer favorable terms, and other orders necessary to allow HPI to continue business as usual.
Mr. Barliant stated, "We are confident that this bankruptcy restructuring will be completed quickly. We are especially pleased that Judge Sontchi set the confirmation hearing in these cases for March 8, 2007, and we expect to go forward on that date."
"By filing a plan of reorganization in a timely fashion, along with our request to pay our vendors immediately, we are sending a clear message that we are taking positive steps that will ensure the continued and improved operation of HPI,” said Douglas Ramsdale, HPI chief executive officer. “HPI will operate normally throughout the process, continuing to manufacture and deliver the high quality products our customers demand. We remain committed to maintaining our excellent relationships with customers, suppliers and employees as we create an even stronger HPI."
HPI’s bankruptcy became necessary because of a number of factors, such as an increase in resin and steel prices; excess capacity in the marketplace; payments due on a $5.6 million interest payment; bumping up against a availability requirement under a pre-petition financing agreement; an inability to increase prices to compensate for supply increases; and other inflationary factors in play. The company – which employees 700 employees throughout four factories in the United States and Mexico – sells its products under the HOMZ™ brand through national and regional retailers.