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A New Jersey bankruptcy judge has confirmed the Chapter 11 liquidation plan of Plastic Suppliers Inc., the Ohio-based compostable film producer that crumbled under pandemic pressures, market shifts, and global sanctions. The ruling finalizes a months-long battle that will return payouts to creditors from a liquidation trust funded by the sale of nearly all the company’s assets.

In an order filed Thursday, U.S. Bankruptcy Judge Andrew B. Altenburg Jr. approved the debtor’s disclosure statement and liquidation plan, which had been adjusted to resolve concerns from the U.S. Trustee’s Office.

“It was a very successful Chapter 11 liquidation proceeding, which will return a sizable dividend to creditors,” said debtor’s attorney Stephen M. Packman of Archer & Greiner PC.

From Pandemic Fallout to Courtroom Survival

Plastic Suppliers, alongside subsidiaries Sidaplax Inc. and Specialty Films Inc., filed for Chapter 11 protection on Dec. 22, citing liabilities between $10 million and $50 million. CEO Michael DuFrayne testified that sales had collapsed during COVID-19 while the shift toward bio-based films and sanctions in 2022 further strained operations.

The company sought a going-concern sale to keep its sustainability mission alive. With API Industries Inc. (Aluf Plastics) as the stalking-horse bidder, an auction was held on Jan. 27. API ultimately won with a $16.4 million offer, a figure that closed in February and netted nearly $5.2 million in cash proceeds for the debtor’s estate.

Creditors Overwhelmingly Backed the Plan

By June, Plastic Suppliers had rolled out its combined Chapter 11 plan and disclosure statement, which impaired nonaffiliate unsecured creditors but offered them pro rata shares in a liquidation trust. The vote was resoundingly in favor: 32 of 33 ballots cast supported the plan, representing 99.5% of the class’s dollar value.

Some late tweaks were made after negotiations with the creditors’ committee and the U.S. Trustee’s Office, including the removal of certain injunction and release provisions. Judge Altenburg approved the revised plan following a hearing, marking the effective date for mid-September.

What Comes Next

The confirmation caps off one of the more notable green-business bankruptcies in recent years. While creditors will see recovery through liquidation proceeds, the outcome underscores the steep challenges compostable film producers face as markets tighten and regulatory shocks ripple worldwide.

Plastic Suppliers is represented by Stephen M. Packman and Douglas G. Leney of Archer & Greiner PC.
The U.S. Trustee’s Office is represented in-house by Martha R. Hildebrandt, Jeffrey M. Sponder, and Samantha S. Lieb.
The creditors’ committee is represented by Brett S. Moore, Kelly D. Curtin, and Michael F. Medved of Porzio Bromberg & Newman PC.