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Recycling plant bondholders file Chapter 7

January 05, 1999|By JULIE E. GREENE

The bondholders for the closed $250 million paper recycling plant in Hagerstown have filed for bankruptcy involuntarily on behalf of the partnership that owns the plant, officials said Monday.

The bondholders filed for Chapter 7 on behalf of Hagerstown Fiber Limited Partnership on Dec. 17 in U.S. Bankruptcy Court in Greenbelt, Md., according to court records.

Joseph J. Bellinger, who represents First National Bank of Maryland, the trustee for the bondholders, would not comment Monday. He works for Miles and Stockbridge in Baltimore.

"It's as frivolous as the Chapter 11. OK, here we go again," said Robert Harris, assistant to Carl C. Landegger. Landegger is chairman of Pencor First Fiber Inc., the partnership's original general partner.

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On Aug. 24, a U.S. Bankruptcy Court judge in New York dismissed the Chapter 11 bankruptcy, which had been filed by the partnership's general partner, Pencor Inc. Pencor First Fiber Inc. filed the motion to dismiss the Chapter 11.

A Chapter 7 filing usually leads to liquidation of the company. If the company can resolve its problems and settle with creditors it may not have to be liquidated.

Chapter 11 is the most common filing, freeing a company from the threat of creditors' lawsuits while it reorganizes its finances.

Robert Catzen, vice president of Pencor Inc. in Baltimore, could not be reached for comment on Monday.

Catzen said in December that the partnership would refile a $130 million lawsuit against Landegger and 25 co-defendants that also was dismissed in U.S. Bankruptcy Court in New York. The lawsuit alleged fraud and breach of contract.

That lawsuit had not been filed in U.S. Bankruptcy Court in Greenbelt as of Monday, according to a court clerk.

Harris said whether that lawsuit could be filed will be up to a trustee, who hasn't been appointed yet by bankruptcy Judge Duncan W. Keir.

The Hagerstown Fiber Operations plant, formerly known as 1st Urban Fiber, shut down in August 1997, with company officials citing a depressed market for recycled paper for the action.

The plant at the corner of Eastern and Memorial boulevards had held its grand opening less than a year earlier in October 1996.

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