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Law360 (June 1, 2020, 11:56 AM EDT ) Glass tableware maker Libbey Glass Inc. filed for Chapter 11 protection in Delaware on Monday with plans to restructure its roughly $500 million in debt, citing the COVID-19 outbreak's impact on the company's already existing liquidity strain.
The Ohio-based glassware maker and multiple affiliates entered Chapter 11 with an agreement in place with existing lenders to provide $160 million in debtor-in-possession financing, including a $60 million new money secured term loan facility and a $100 million secured revolving, asset-based facility that will roll-up prepetition debt, according to Libbey's first-day declaration.
In a statement, Libbey said its "international subsidiaries in Canada, China, Mexico, the Netherlands and Portugal are not included in the Chapter 11 proceedings and are operating in the normal course of business."
The company said it continues to discuss with "lenders and other stakeholders regarding the terms of a consensual financial restructuring plan and is focused on moving through the process as efficiently as possible."
"While we entered 2020 with positive momentum from our strong finish in 2019, the dramatic and prolonged impact of COVID-19 on the demand for our products and on our business is truly unprecedented in Libbey's more than 200-year history," Libbey CEO Mike Bauer said. "As a result, entering this process is a necessary step to address our liquidity, strengthen our balance sheet and better position Libbey for the future."
Libbey's debt includes roughly $70 million owed under a secured asset-based facility administered by JPMorgan Chase Bank NA, about $378 million owed on a senior secured credit agreement administered by Cortland Capital Market Services LLC and $35 million in unsecured debt.
As the company veered closer to maturity dates on debt agreements, global market conditions continued to impact Libbey's revenues, with the company reporting a net loss of $69 million for 2019, according to the declaration.
"Throughout 2019 and the start of 2020, the debtors' business was impacted by global competition in all of the debtors' distribution channels, fluctuating business and consumer confidence in the United States and Europe as a result of increased economic and political uncertainty from various factors including ongoing trade tensions between the United States and China and the potential for a Brexit no-deal in Europe, as well as slowing economies in Europe, China and parts of Latin America," Brian Whittman of Libbey's restructuring adviser Alvarez & Marsal North America LLC said in the declaration.
The COVID-19 outbreak further worsened conditions, with production halted at Libbey's facilities in Ohio and Louisiana, the closure of two retail outlet stores in the U.S. and operations at distribution centers in the U.S. and internationally either halted temporarily or cut back, the declaration said.
As its liquidity crisis worsened, the company laid off or furloughed its U.S. workforce, cut salaries for its Mexican employees and suspended its pension matching program.
"As of December 31, 2019, the debtors' liability under the retiree benefit programs for both salaried and hourly employees is approximately $48 million and the liability is unfunded," the declaration said.
The focus of Libbey's Chapter 11 will be in "reaching a consensual, value maximizing transaction with the creditor constituencies, a process that began prepetition," Whittman said.
Founded in Massachusetts as the New England Glass Company in 1818, the Ohio-based Libbey produces glass tableware in five countries and has customers in more than 100 countries, the declaration said. Its brands included "Libbey," "Libbey Signature," "Master's Reserve," "Crisa," "Royal Leerdam," "World Tableware," "Syracuse China" and "Crisal Glass."
In addition to glass tableware, the company makes ceramic dinnerware and metal flatware that is sold "primarily in the foodservice, retail and business-to-business channels of distribution," the declaration said.
The company, including its nondebtor affiliates, has 5,543 employees, about 70% of those outside the U.S., according to the declaration.
An initial hearing in the Chapter 11 is scheduled for Tuesday in front of U.S. Bankruptcy Judge Laurie Selber Silverstein, according to court records.
Libbey is represented by John H. Knight, Russell C. Silberglied, Paul N. Heath and Zachary I. Shapiro of Richards Layton & Finger PA and George A. Davis, Keith A. Simon, David Hammerman, Anu Yerramalli and Madeleine C. Parish of Latham & Watkins LLP.
The case is In re: Libbey Glass Inc. et al., case number 1:20-bk-11439, in the U.S. Bankruptcy Court for the District of Delaware.
--Editing by Alyssa Miller.
Update: This story has been updated with more details from the filing.
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