Cereplast voluntarily files for Chapter 11 protection to strengthen its balance sheet, clean up its capitalization structure and gain financial flexibility; company intends to continue to operate during reorganization process
February 17, 2014
– Cereplast File for Chapter 11 Protection
Cereplast, Inc. (OTCQB: CERP), a leading manufacturer of proprietary biobased, compostable and sustainable bioplastics, today announced that the Company has filed voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Indiana. The Company has taken this action to strengthen its balance sheet, clean up its capitalization structure and gain financial flexibility as it continues to realign its operations. The Company intends to continue to operate during the reorganization process.
As part of the reorganization, the Company is taking steps to align its cost structure with the realities of market demand. The Company expects to redirect its operations in two directions: (1) toward traditional compounded products and recycling polyolefin and (2) bioplastic made of diversified feedstock including algae and polylactic acid.
"We intend to use the reorganization process to help implement our plan to lower costs, stabilize our businesses, grow revenue and diversify our product lines," said Frederic Scheer, Chief Executive Officer. "We have taken a number of steps to improve our operations over the past few months and we were making great progress; however, the lack of traction of bioplastics demand in the United States, the repetitive delays in implementation of the bioplastic regulation in Europe and especially in Italy combined with the legal problems created by several of our lenders made clear to our Board that reorganization was the proper path forward. We believe that this reorganization will enable us to reduce our debt and implement operational changes, while maintaining our commitment to the environment."
He continued, "We appreciate the ongoing dedication of our employees, whose hard work is critical to our success and the future of our company. Regrettably, as a result of this reorganization, jobs will be impacted during the transition period."
In conjunction with its reorganization, the Company is actively negotiating a debtor-in-possession (DIP) financing from several interested parties. On Court approval, the new financing and cash generated from the Company's ongoing operations will be used to support the business during the reorganization process.
The Company intends to file various motions with the Court in support of its reorganization, including requesting authorization to continue paying employee wages and providing health care and other benefits. The Company will also ask for authority to continue existing customer programs and intends to pay vendors for goods and services as authorized by the Court.
The Company has established a toll-free Restructuring Information Hotline for interested parties at (812) 220 54 00 Ext: 1014.
Additional information will be made available on the Company's website at http://www.cereplast.com. Court filings and other documents related to the reorganization proceedings (Case number: 14-90200 BHL 11) are available on a separate website administered by the Court: http://www.insb.uscourts.gov/.
About Cereplast, Inc.
Cereplast, Inc. (OTCQB:CERP) designs and manufactures proprietary biobased, sustainable bioplastics which are used as substitutes for traditional plastics in all major converting processes - such as injection molding, thermoforming, blow molding and extrusions - at a pricing structure that is competitive with traditional plastics. On the cutting-edge of biobased plastic material development, Cereplast now offers resins to meet a variety of customer demands. Cereplast Compostables® resins are ideally suited for single-use applications where high biobased content and compostability are advantageous, especially in the food service industry. Cereplast Sustainables® resins combine high biobased content with the durability and endurance of traditional plastic, making them ideal for applications in industries such as automotive, consumer electronics and packaging. Learn more at http://www.cereplast.com.