Quebecor World's Reorganization Delayed?

Please see "Quebecor World Ready To Abandon 'Novink' and Bankruptcy Protection", which clarifies and updates the information in this article.

Quebecor World's emergence from bankruptcy protection has apparently been delayed a couple of weeks, at least partly by a $1 printing press.

The big printing company had hoped to exit Chapter 11 (and the Canadian equivalent) this week with a new name and new board of directors, but a U.S. bankruptcy court has scheduled a July 27 hearing in the case. That is six days after the company’s debtor-in-possession financing is scheduled to expire.

Quebecor World has been silent about the case since announcing on July 2 that U.S. and Canadian courts had approved its reorganization plan and that it "anticipates the consummation of the Plans to occur in mid-July 2009."

The mainstream news media widely reported that announcement without noting, as Dead Tree Edition did, that there were still hurdles to clear. (So this is business journalism in the 21st century: One of the biggest bankruptcies in Canadian history is covered by professional reporters relying solely on news releases -- and a sleep-deprived amateur trying to make sense of dense legal documents.)

Despite various motions and hearings this week, the status of the joint Canadian-U.S. bankruptcy case is a bit murky. Quebecor World worked out a disagreement with a group of lenders and has tweaked the reorganization plan to settle some small claims. But at least one settlement would apparently affect the creditors enough that they must be given a chance to object – thus the July 27 hearing.

The settlement involves Quebecor World’s lease of a flexographic press in Merced, CA from Banc of America Leasing & Capital (which, despite the half-French, half-English name, is neither Canadian nor affiliated with Bank of America). The leasing company had filed a claim saying Quebecor World had not honored terms of the lease, which expired last August.

World Color Press, which was later purchased by QW, signed the lease in 1994, apparently as part of a lease-purchase arrangement. Capital-intensive businesses often use such deals to finance equipment purchases.

The settlement calls for Quebecor World to pay $144,000 cash for outstanding lease payments and for the leasing company to be recognized as having claims in the bankruptcy case of more than $1.3 million. That would cut into the compensation to be received by other creditors; the hearing will give those creditors a chance to object to the settlement.

Quebecor World will also have the option of purchasing the Cerutti press for $1. Because the press was designed to produce telephone books, a declining market, it may not be worth much more than $1.

There is no word on whether Quebecor World has worked out or overcome all other objections to its reorganization plan or whether it can get its financing extended. And there's no word on whether Quebecor World leaders are calling R.R. Donnelley and saying, "Now about that last offer . . ."