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Tissue plant woes troubling to RDA

November 13, 2001|By AARON CLAVERIE, Staff Writer

CALEXICO — Big boxes of two-ply paper towels were piled 30 feet high, ready to be shipped from Calexico Tissue Co.'s Portico Boulevard loading dock on Monday.

While 1,000 employees of subsidiaries of American Tissue Corp. have been fired in the wake of the company's Sept. 10 bankruptcy filing, the parking lot at Calexico Tissue Co. — a subsidiary of ATC — remains filed with employee vehicles as paper towels and napkins are still being shipped out daily.

Contacted on his cellular phone Monday, plant manager Javid Nassir said he has heard some American Tissue Corp. warehouses or manufacturing plants throughout the country could be shuttered or frozen during winter months but he hadn't been told of any potential layoffs or a slowdown in Calexico. He added he couldn't guarantee the continued viability of the plant in light of the parent company's reorganization after the filing.

"Right now as far as I'm concerned, we're open 24 hours, six days a week. In fact, just last week I hired some more people."


During tonight's city Redevelopment Agency board meeting, the Calexico City Council, seated as the RDA board, will discuss Calexico Tissue Co.'s recent bankruptcy filing in closed session.

On Sept. 10, American Tissue Corp. and each of its subsidiaries, including Calexico Tissue Co., filed for protection under Chapter 11 in the U.S. bankruptcy court in Delaware.

Specifics concerning the company's reorganization — and how Calexico's coffers will be affected — will not be made public during the executive session, but Mayor Pro Tem John Renison said no matter what is discussed the bottom line is making sure Calexico Tissue Co. pays back city funds it was loaned in August 2000.

The RDA board loaned the company $360,000 in city funds last August for expansion costs.

Renison said, "Everything went smooth with the expansion and we had every reason to believe (Calexico Tissue Co.) was a viable operation; then this.

"Bottom line — posthaste, we have to find out how to protect what's owed us."

According to an Associated Press story released the day after American Tissue's filing, communities such as Calexico, to whom the company owes property taxes likely, will get paid first.

"Well, that's the good news," Renison said.

When Nassir was asked if the RDA board will be discussing the corporation's reorganization plan tonight and the timetable defining when Calexico would be repaid, he deferred the questions to American Tissue's New York headquarters.

Messages to the New York office were not returned and numerous attempts to contact a secretary or spokesperson were unsuccessful.

Nassir said he was having a hard time contacting his superiors as well and said the communication problem might be related to the crash of American Airlines Flight 587.

ATC's headquarters are in Hauppauge, N.Y., near a Long Island airport, Nassir said.

Bankruptcy experts quoted in the Sept. 11 Associated Press story said most American Tissue creditors will get paid once the company's reorganization plan is in place, but it will take time and they could receive only a fraction of what they are owed.

Joseph Foster, a bankruptcy lawyer in Nashua, N.H., said the company will submit a reorganization plan to the court, which must be approved and then sent to creditors to be voted on.

"It could be months if not years before people see their money," he said. "Normally, companies will sell off divisions to pay off debts. That could be good news for the New Hampshire mills."

American Tissue had 4,200 employees and holdings in 19 states including California at the time of filing.

It is one of the country's largest paper companies, producing private label and branded facial tissues, napkins, paper towels, bathroom tissues, paper plates, table covers and special occasion printed paper products.

Kurt Goldschmidt, an American Tissue spokesman, told the Associated Press that for the time being the 1,000 of its employees nationwide who are out of work will continue to be idled. He said the company does not know when the workers will return, and he indicated there may be permanent layoffs.

"It's not a given, but that would be my thinking," Goldschmidt said.

>> Staff Writer Aaron Claverie can be reached at 337-3419 or

>> The Associated Press contributed to this story.

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