Toronto-based Fraser Papers Inc. has begun a court-supervised bankruptcy restructuring in Canada and the United States as the forestry company tries to stem a flow of red ink and deal with a battered market and pension funding shortfall. The lumber, pulp and paper producer said yesterday that it has filed for protection under the federal Companies' Creditors Arrangement Act in Canada in the Ontario Superior Court. It will also seek a similar filing under Chapter 15 of the U.S. Bankruptcy Code. "The filing will provide Fraser Papers with a defined process and the necessary time to restructure its affairs in order to emerge with a sustainable and profitable specialty paper business," CEO Peter Gordon said in a release after the company's shares were halted on the Toronto Stock Exchange pending news. The company employed 2,600 people at the end of 2007 and operates paper, lumber and specialty packaging mills in New Brunswick, Maine, New Hampshire and Quebec. FPS (TSX) fell 50 per cent to close at 7 cents.
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