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SMART Papers' fate in judge's hands
By Chris Dumond
Staff Writer
HAMILTON — A federal judge sitting in Delaware could decide today whether to allow Connecticut-based hedge fund firm Plainfield Asset Management to take over SMART Papers.
SMART Papers, which employs about 450 workers here, filed for Chapter 11 bankruptcy protection in late March. The paper manufacturer had been set to be sold at a court-approved auction last week as its time ran out with its lender, Wachovia.
Plainfield, however, circumvented that auction by striking a deal with the bank to take over about $40 million of SMART’s debt.
Under the terms to be considered by U.S. Bankruptcy Court Judge Christopher Sontchi this morning, Plainfield would take control of the company while reorganizing it under bankruptcy law protections from other creditors. That plan is to be filed with the court by Sept. 6.
The firm would agree to provide financing to keep the company afloat as it works to emerge from bankruptcy. Terms also include provisions to pay back International Paper for about $2 million SMART owes the former B Street mill owner.
Plainfield representatives have declined interview requests about their plans.
The firm, based in Greenwich, Conn., was founded in February 2005 by former D.E. Shaw & Co. managing director Max Holmes. The group manages more than $1 billion in investment capital, according to its Web site.
Hedge funds such as those managed by Plainfield are typically limited to fewer than 100 investors, usually of $1 million or more in net worth. Because they are not as heavily regulated as mutual funds, they can pursue riskier strategies to achieve more aggressive investment goals.
Contact this reporter at (513) 820-2025 or cdumond@coxohio.com.
