Tuesday, April 21, 2009

AbitibiBowater gets bankruptcy protection in Canada

Forest products giant AbitibiBowater Inc. has been granted bankruptcy protection in Canada.

A Quebec court granted the order late Friday, AbitibiBowater said in a release.

The ruling came after a Delaware court granted the company's request for shelter under Chapter 11 of the U.S. bankruptcy code Thursday.

Earlier this week, the company said it had no choice but to seek bankruptcy protection because it couldn't get its debt problems under control.

The demand for pulp, lumber, newsprint and other paper products has taken a hit around the world as a result of the recession.

The company has said it intends to continue its daily operations, including payroll and customer obligations, as it deals with a debt load totalling about $6 billion US.

On Friday, the Quebec government offered the newsprint company loan guarantees worth up to $120.6 million to help the company restructure. About half of AbitibiBowater's 14,000 employees live in Quebec.