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Bankruptcy Filing Against Durango Could Block Final Paychecks

Creditors Want Their Claims Paid Before Workers

POSTED: 10:06 a.m. EST November 5, 2002

Claims filed against Durango-Georgia Paper Co. in federal bankruptcy court may cost already idle mill workers from the St. Marys plant their last two paychecks.

The company announced Monday that three of its creditors filed involuntary bankruptcy claims, which would freeze company assets to ensure at least partial payment of money owed by the company to vendors and other creditors.

Durango-Georgia Paper CompanyThe claims could force one of Camden County's largest employers into Chapter 7 bankruptcy.

The company was set to close on Nov. 15, and most of the plant's 900 workers were already told not to report to work -- but were to be paid until the official closing date. Durango-Georgia President Herb Baez said Monday that the company has the money to make the payroll, but the bankruptcy action would prevent those paychecks from being issued.

On Friday, a $100,000 engineering feasibility study jointly funded by the company and the state showed that more than $100 million would need to be invested in the mill for it to be competitive with other paper manufacturing facilities.

Last Thursday, Standard & Poor's Ratings Services lowered its corporate credit rating on Durango-Georgia's Latin-American parent company, Corporacion Durango S.A. de C.V. to single-'B' from single-'B'-plus.

The ratings service reported that Corporacion Durango had $853 million in debt as of September 2002.

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