Smurfit-Stone creditors set to vote on reorg

Smurfit-Stone Container Corp., the maker of boxes and packaging, won court permission to send its reorganization plan to creditors for a vote, over the objections of shareholders who say the company is undervalued.

U.S. Bankruptcy Judge Brendan Linehan Shannon in Wilmington, Delaware, ruled that the company's so-called disclosure statement is sufficiently detailed to allow creditors to vote on the reorganization proposal. Under the plan, unsecured creditors would be given company stock in return for canceling as much as $3.1 billion in debt they are owed.

Shannon overruled objections to the disclosure statement from shareholders and public officials in Montana and Michigan, where Smurfit-Stone closed factories after filing for bankruptcy in January 2009.

Shannon asked the Chicago-based company to work with officials in those states who are trying to find new uses for the factories to replace hundreds of jobs lost when the plants closed.

"If there are alternatives out there, people need to move very, very quickly," said Shannon, who has received hundreds of letters about the closings.

Shareholders have tried to find out whether company managers have talked to potential buyers about selling Smurfit-Stone after it cuts debt and leaves bankruptcy, Rachel Strickland, a lawyer for investors, said today in court.

At Strickland's request, Shannon ordered the company to provide a more precise estimate of its debt and a better explanation for how it would use $500 million in cash. The judge rejected Strickland's request to order Smurfit-Stone to disclose details about any potential sale.

The case is Smurfit-Stone Container Corp., 09-10235, U.S. Bankruptcy Court, District of Delaware (Wilmington).