DVD Manufacturer Cinram International Seeks Bankruptcy Relief
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DVD Manufacturer Cinram International Seeks Bankruptcy Relief

June 29, 2012


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Cinram International Inc., a manufacturer of pre-recorded media products like DVDs and CDs, is filing for bankruptcy protection from its creditors , according to a recent report from Bloomberg News.

The company, which is based in Toronto, filed for Chapter 15 bankruptcy this week in a Delaware court. The bankruptcy filing will protect the company from its American creditors, but not its creditors in Canada.

And the company will likely have a brief trip through bankruptcy court, as it has already reached a tentative deal to sell most of its assets to Najafi Cos.

Sources say that Cinram makes and distributes pre-recorded DVDs, audio CDs, Blu-ray discs, and CD-ROMs for music labels, computer software outfits, publishers and movie studios.

The company has 20 different facilities in North America and Europe that can reportedly create more than 2 billion DVDs, 500 million CDs and 55 million Blu-ray discs during a single year, according to information released by the company.

And despite the likelihood that the company will be sold during the bankruptcy process, observers are confident that it will be able to continue its recent success, as it shipped almost one billion different products to the United States in 2009.

Jahm Najafi, the Chief Executive Officer of the company that plans to purchase Cinram, says that Cinram is “a market leader in its industries with a long track record of best-in-class performance” and that he looks forward to a “a seamless transition for our customers.”

Cinram is taking advantage of a unique feature of the bankruptcy code, Chapter 15 bankruptcy, which allows foreign companies undergoing restructuring outside the United States to file for bankruptcy protection their American creditors.

The primary restructuring for Cinram in this case is taking place in the Ontario Superior Court of Justice, but being able to file in the United States gives Cinram some breathing room as it attempts to recreate itself in a different form.

In its filing, the company said that it had only $50 million in assets, compared with more than $500 million in debt, so it’s no surprise that the company chose to seek protection in a bankruptcy court. Eight of the company’s affiliates also filed for bankruptcy in Wilmington, Delaware.

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