Durango-Georgia Paper Company

Client

Durango-Georgia Paper Company, was a manufacturer of a variety of paper products, producing up to 1000 tons of paper per day with annual pre-petition sales of approximately $270 million.

Challenge

High costs, a plant explosion and outdated equipment forced the Company to close and file for bankruptcy in Georgia in 2002. The Company was unable to liquidate the assets of the estate during the bankruptcy. Challenges included a negative cash position, a tax lien on substantial assets, significant outstanding litigation, unreconciled claims and potential preference actions of $20 million.

Solution

Following confirmation of the Durango Georgia Paper case Bridge was appointed trustee for the post- confirmation estate and charged with maximizing value for the creditors. Bridge sold processing equipment, aggressively pursued causes of action, cut unnecessary staff and professional assistance, utilized the Bridge’s proprietary preference software to analyze the approximately $20 million in potential preference payments and utilized proprietary claims management software to reconcile claims. Bridge also engaged Hilco Real Estate to find potential buyers interested in re-starting the mill or developing the property into a multi-use community.

Results

The estate has transitioned from one with little available cash to a comfortably solvent position. Bridge acquired the equity of St. Marys Railroad LLC from the Debtor’s Mexican parent in order to protect development rights to the mill property. The railroad turned profitable during the first month Bridge operated it for the estate and has improved service to a strategic US Navy base and local industries. On December 15, 2005 the Bankruptcy Court approved the sale of the mill property and the railroad to LandMar Industries, a Jacksonville real estate development subsidiary of Duke Energy, and the sale of the mill equipment and non-contiguous real estate totaling another 2,500 acres for a total purchase price estimated to exceed $50.0 million. Prior to confirmation of the Debtor’s plan of reorganization, the unsecured creditors had received indications of interest in the range of $3 - $5 million. Current estimates of a final recovery exceed 30% on allowed claims.

RELEVANT PRESS RELEASES

Bankruptcy Court Approves Sale of Durango Georgia Paper Company Bankruptcy Estate

Creativity yields bright future for old mill -- and creditor recoveries to boot

Outside-The-Box Solutions To Maximize Post-Confirmation Creditor Recoveries