Opinion ID: 2655125
Heading Depth: 2
Heading Rank: 2

Heading: WFA Files for Bankruptcy

Text: In mid-January 2010, WFA filed a Chapter 11 petition in the Bankruptcy Court for the Middle District of Louisiana. WFA’s debts were significant; aside from the millions it owed Amzak, its debts included approximately $2 million owed to the State for its secured senior loan, approximately $10 million owed to the Tembec entities for the acquisition of the mill, approximately $14 million in unsecured debts to assorted vendors, and an indeterminate amount to Fluor. WFA owed Amzak roughly $13.4 million in principal and interest under the credit agreement. The principal asset of WFA, the paper mill, was operating at the time of WFA’s bankruptcy filing; if it shut down, the cost to restart it 4 Case: 13-30675 Document: 00512546787 Page: 5 Date Filed: 02/27/2014 No. 13-30675 would be $10 to $20 million and its value would plummet. Amzak lent WFA about $4 million more in debtor-in-possession (“DIP”) financing, and WFA released any rights to challenge Amzak’s mortgage. However, the mill shut down in early February 2010. The bankruptcy court ordered a sale of WFA’s assets under 11 U.S.C. § 363, including the paper mill. 1 The auction sale occurred in April 2010. Amzak became the winning bidder for $9.9 million, which it paid as follows: (i) a credit bid of approximately $4.4 million of its DIP loan; (ii) a payment in cash of approximately $2.5 million to satisfy the State’s firstranking loan; and (iii) a credit bid of $3 million of its pre-bankruptcy defective mortgage. After its purchase of the paper mill, Amzak transferred the asset to a wholly owned subsidiary, KPAQ Industries, LLC (“KPAQ”). Amzak invested over $58 million into KPAQ during a period of roughly 30 months. KPAQ fared no better than WFA and has made no profit.