The firm applied to take the company into reconstruction, similar to US Chapter 11 bankruptcy on 6 November 2012 after its bank terminated loans with immediate effect.
Despite Vida Paper claiming it had fulfilled payment obligations, its bank cut its borrowing limit from SEK100m (£9.5m) to SEK40m (£3.8m), and the current owner was not prepared to raise the additional SEK60m (£5.7m) funds independently, according to Vida Paper’s liquidator Bertil Stridh, of Swedish insolvency practitioner Amber.
The application was accepted by the Swedish courts the same day and Eric Edström of Glimstedt law firm was appointed as administrator to the company, which produces paper and dissolving pulp for the textile industry from its Lessebo mill in southern Sweden.
On 12 December, Vida Paper declared itself bankrupt and all payment plans to suppliers were ceased as Stridh was appointed liquidator. The company continues to be fully operational, with all payments being submitted in cash.
Stridh said that there are a few parties interested in taking on the company, and he was in negotiations to find an investor by the end of January.
He added that Vida Paper’s loyal clients were keeping the company afloat by agreeing to cash payments.
Stridh added that the decreasing market for pulp and paper had led the company into financial difficulties, most notably within the textile industry, where the price for dissolving pulp had decreased from $1,500 (£923)/tonne to $650 (£400)/tonne in recent times.
Vida Paper said that the parent company, Vida Group, is not financially affected by the paper manufacturing subsidiary’s issues.
