NEW YORK (Reuters) – A U.S. bankruptcy court on Tuesday approved bid procedures for paperboard and plastic packaging maker Chesapeake Corp (CSKEQ.PK) to sell itself subject to an auction process over the next few months.
According to court papers, U.S. Bankruptcy Judge Douglas Tice, approved procedures for the company to sell itself after a hearing in Richmond, Virginia on Tuesday. He set March 23 as a sale hearing date to formalize the deal.
Chesapeake filed for Chapter 11 bankruptcy protection on Dec. 30 saying it had reached a deal with a group of investors, including affiliates of Irving Place Capital Management LP and Oaktree Capital Management LP to sell itself for about $485 million, minus certain obligations.
The sale will occur at a slightly slower pace than Chesapeake initially requested. According to court papers, the was seeking an expedited sale process so that would have allowed it to close a deal in mid-February.
The company’s creditors had complained in court documents that the expedited sale process would “chill bidding” and create an unlevel playing field for other potentially interested buyers.
The group of investors are slated to act as the “stalking horse” or lead bidder at a bankruptcy auction to be held prior to the sale hearing, according to court documents.
The case is In re Chesapeake Corp, U.S. Bankruptcy Court for the Eastern District of Virginia, Richmond Division. No. 08-36642.
(Reporting by Emily Chasan in New York and Santosh Nadgir in Bangalore; Editing by Andre Grenon)