Chesapeake Corp. Files for Bankruptcy

RICHMOND, Va. -- Specialty packaging company Chesapeake Corp.(CSK) has filed for Chapter 11 bankruptcy protection and plans to sell itself to a group of investors for about $485 million.

The company's stock, which is traded over the counter, closed at 6 cents Monday, well off the $5.61 it traded at a year ago and a sharp drop from the more than $20 it traded for just a few years ago.

Chesapeake, which makes paper cartons and plastic containers for the health care, beverage and food markets, last year cut jobs and realigned operations in an effort to foster growth and reduce costs. The company struggled earlier this year to complete a $250 million credit line with a group led by GE Commercial Finance Ltd. and General Electric Capital Corp. to refinance prior debt.

Chesapeake filed for bankruptcy in the Eastern District of Virginia in Richmond under Chapter 11, which allows a company to reorganize. Non-U.S. units are not included in the filing.

The group of investors buying Chesapeake include Irving Place Capital Management LP and Oaktree Capital Management LP. They plan to continue operations. All of Chesapeake's manufacturing and distribution facilities are fulfilling customer orders as usual, the company said.

"After exploring a range of possible alternatives to improve our balance sheet and maintain the liquidity we need to operate our businesses in an extremely difficult economic environment, the management and board of directors of Chesapeake concluded that a court-supervised sale of our business operations is in the best interest of the company and its stakeholders," said President and Chief Executive Andrew J. Kohut, in a statement.