N.C.-based US operation of the Italy-based polyamide yarn producer Nylstar Group, has filed a
voluntary prepackaged petition for reorganization under Chapter 11 of the US Bankruptcy Code. The
purpose of the filing is primarily to protect the assets of the US operation in anticipation of
separating from its European parent, which has been facing overcapacity problems and associated
financial difficulties, according to Basil “Sonny” Walker, president and CEO, Nylstar Inc.
“Nylstar is the largest nylon textile denier supplier in Europe, whereas we’re relatively
small here in the US. As the market has downsized over there, there’s been a need to downsize the
company,” Walker said, explaining that there will be some filings against the company in Europe,
and, indeed, one or more petitions already have been filed. “It was important for us to file a
reorganization plan here in the US ahead of them so that we could protect our assets here,” he
added.
Walker said the US operation is in good financial shape and is expected to become a
stand-alone company, continuing to operate at the same level as it does currently, following its
emergence from bankruptcy. “Unlike most bankruptcies, we’re current with all our vendors. In fact
they were surprised at the filing because we pay our bills on time. We’re cash-flow positive, and
we run a good operation here. It was basically a move to deal with financial concerns related to
inter-company debt and also to restructure secured debt with Bear Stearns.,” he said, adding that
Bear Stearns, which holds the loan for Nylstar Inc., will convert that loan to equity.
Walker anticipates that the reorganization process will be quick. “It will depend on what
challenges we receive. There will be none from our vendors because we don’t owe them anything, but
there is the possibility we could get some claims from Europe because of inter-company debt and
debt associated with Rhodia [a former shareholder in the Nylstar Group],” he explained.
“In any case, this will be relatively fast and clean, a pretty simple in-and-out
reorganization,” Walker said.
July 10, 2007
