Business

Carton manufacturer Chesapeake is considering seeking Chapter 11 bankruptcy protection, but has insisted that this is only one of a number of options.

The statement from Chesapeake follows the publication of a regulatory filing today (13 November) that stated that the company's restructuring activities may require it to seek the protection of US bankruptcy laws, for example Chapter 11.

Chapter 11, which is not the same as going into insolvency, is a legal process in the US that allows companies to operate as usual as the company implements measures to address its financial problems.

A spokesman from the company said that if this process went ahead, "which is one of a number of possibilities at the moment", then Chesapeake's operating companies in Europe and elsewhere should continue to operate on a normal basis.

The filing came as Chesapeake is attempting to refinance $250m of debt before a deadline of 10 December.

Chesapeake's subordinated notes holders formed an ad-hoc group that entered into discussions with financial advisor, Houlihan Lokey over financial restructuring alternatives.

The company stated that it continues to be "actively engaged" in discussions with the ad-hoc committee and its advisor about restructuring alternatives.

According to the filing published today, the alternatives currently under consideration "would likely reduce the value of our existing common stock to nominal or no value".

However, an earlier filing acknowledged that failure to successfully implement a restructuring or refinancing plan would "have a material adverse effect on our business, results of operations and financial position and would raise substantial doubt about our ability to continue as a going concern".

It was announced in October that Chesapeake was to be delisted from the New York Stock Exchange after its market capitalisation fell below $25m (£14m) for more than the allowed 30-day period, averaging at $21.2m.