Chesapeake plans to sell assets

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Richmond-based Chesapeake Corp. hopes to sell virtually all of its assets for $485 million to group of investment firms under a proposed deal that would be supervised by federal bankruptcy court.

The 90-year-old specialty packing company filed for Chapter 11 bankruptcy protection Monday in Richmond. The filing protects the company from creditors while it reorganizes its finances and proceeds with an auction of its assets.

On Tuesday, U.S. Bankruptcy Judge Frank J. Santoro approved the company’s motion for $18.5 million in debtor-in-possession financing from a bank group led by Wachovia Corp. The financing, which could be enlarged to $37 million, will help the company keep its businesses functioning during Chapter 11 proceedings.

Chesapeake wants to complete the sale of its assets by March. Shareholders likely will receive little or nothing from the deal.

Chesapeake began business as a paper mill in West Point in 1918. Today, however, most of its operations and 5,400 employees are based overseas. Its Richmond corporate office has about 25 employees. (Richmond Times-Dispatch)

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