Court approves Cenveo’s plan

A federal bankruptcy court approved this week printing company Cenveo’s reorganization plan, a move that the firm said would set it up to emerge from Chapter 11 proceedings in the next few weeks.

Restructuring would reduce Cenveo’s funded debt to about $325 million, compared with around $1.1 billion when it filed for bankruptcy in February, according to company officials. At the same time, the firm would become privately held.

“The terms of the plan will enable the company to exit Chapter 11 with a substantially deleveraged balance sheet and increased liquidity, allowing the company to focus on its operations and grow its businesses,” the company said in a statement this week.

Cenveo’s plan is backed by an “overwhelming majority” of creditors, according to its statement. Its largest shareholders comprise institutional investors.

As part of the overhaul, Cenveo announced in June that CEO and Chairman Robert Burton Sr., would retire and be replaced by son and President Robert Burton Jr., when the company finishes the Chapter 11 process. Michael Burton, Cenveo’s chief operating officer and another Burton son, would become president.

Burton Sr., who has served as CEO and chairman for the past 12 years, is set to stay on as a company adviser until Dec. 31. He will remain a Cenveo shareholder. His retirement announcement did not indicate that he would step down as chairman.

“You want to have a sense of continuity, but, on the other hand, you want a sense that the person with their hands on the steering wheel recognizes the mistakes that have been made and that they have to plot a new course,” David Cadden, a professor emeritus in Quinnipiac University’s business school said in a recent interview. “I don’t know if I feel confident that the sons of the CEO are going to be able to do that.”

While Cenveo officials say they are optimistic about the company’s post-bankruptcy prospects, the company still faces an uncertain future.

Last month, the federal bankruptcy court that approved the re-organization signed off on an agreement between Cenveo and the U.S. Department of Justice to cancel Cenveo’s $61 million contract to carry out printing and mailing services for the 2020 U.S. Census.

Following talks between Cenveo and Justice that dealt with the company’s restructuring, including its projected liquidity, federal authorities concluded “because of the constitutional mandate to conduct the 2020 Census, it is in the public interest to terminate the Census contract,” according to an excerpt of the settlement order.

As part of the settlement, Cenveo is receiving $5.5 million from the U.S. Census Bureau.