Libbey Inc. has announced the company and its U.S.-based subsidiaries have filed voluntary petitions for a court-supervised reorganization under Chapter 11 of the Bankruptcy Code in the U.S.
The company’s international subsidiaries in Canada, China, Mexico, the Netherlands and Portugal are not included in the Chapter 11 proceedings and are operating in the normal course of business.
According to the company, Libbey expects to use the court-supervised restructuring process to strengthen its balance sheet to navigate the effects of the COVID-19 pandemic and better position the company for the future.
“While we entered 2020 with positive momentum from our strong finish in 2019, the dramatic and prolonged impact of COVID-19 on the demand for our products and on our business is truly unprecedented in Libbey’s more than 200-year history. As a result, entering this process is a necessary step to address our liquidity, strengthen our balance sheet and better position Libbey for the future,” said Mike Bauer, CEO of Libbey. “We believe this process will help Libbey become an even stronger, more influential partner to our customers, vendors and end users, and ensure we continue to create the most rewarding experiences with our extensive line of high-quality glassware and other tabletop products.”
Libbey’s existing lenders have agreed to provide up to $160 million in debtor-in-possession financing, including a $100 million revolving credit facility and a $60 million term loan. Following court approval, the company expects this financing, together with cash flow from operations, to support the business during the court-supervised process.
Libbey said it is continuing to serve customers and end users globally, and will continue to evaluate the operating environment and make adjustments, as necessary, to adapt to the impact of COVID-19.
Bauer also said the company is seeing some improvement in its end markets with the gradual lifting of stay-at-home restrictions, and during the past few weeks have reopened its U.S. distribution centers and restarted several production lines in Toledo, Ohio, and Shreveport, Louisiana.
Libbey said it is filing customary first day motions that, once approved by the court, will allow the company to smoothly transition its business into Chapter 11, including, among other things, granting authority to pay employee wages and benefits and honor customer commitments in the ordinary course of business. The company said it will also pay vendors in the ordinary course for all goods and services provided on or after the Chapter 11 filing date.