Klöckner Pentaplast: €1.3B Debt-for-Equity Prepackaged Plan Confirms in 42 Days

Klöckner Pentaplast (kp), the Luxembourg-headquartered global packaging films manufacturer with approximately €2 billion in annual revenues and 31 manufacturing facilities across 18 countries, entered chapter 11 bankruptcy protection on November 4, 2025, through lead debtor Kleopatra Finco S.à r.l. in the U.S. Bankruptcy Court for the Southern District of Texas. The company, founded in Germany in 1965 as a subsidiary of Klöckner-Werke AG, filed with approximately €2.32 billion in funded debt accumulated through more than a decade of private equity ownership under Strategic Value Partners (SVP), which acquired the company from Blackstone in 2012. The prepackaged restructuring eliminated approximately €1.3 billion in debt and transferred 100% of the reorganized equity from SVP to first lien creditors.

The company received court confirmation of its Chapter 11 Plan on December 16, 2025—42 days after filing—with near-unanimous creditor support: 99.75% acceptance by first lien holders and 99.46% by second lien holders. The restructuring preserved ongoing operations for approximately 5,700 employees globally while leaving trade creditors and general unsecured claims entirely unimpaired, preserving continuity with suppliers and customers throughout the process. The case transferred ownership to the company's first lien lenders—principally institutional investors and distressed debt funds—after SVP sought to refinance €1.85 billion in debt maturing in 2026.

Company History and the LINPAC Acquisition

Klöckner Pentaplast traces its origins to 1965 Montabaur, Germany, where it was established as a subsidiary of Klöckner-Werke AG, the German industrial conglomerate. Over the following decades, the company built expertise in manufacturing rigid and flexible plastic films for pharmaceutical blister packaging, food containers, medical device packaging, and consumer products. The company expanded internationally in 1977 when it founded U.S. operations, opening its first production facility outside Germany in Gordonsville, Virginia in 1979—establishing a manufacturing footprint that would grow to become one of the largest packaging film operations in North America.

The company's ownership structure transformed through successive private equity transactions. In 2001, Klöckner Pentaplast was sold to a partnership between Cinven and JP Morgan. Blackstone Group acquired the company in 2007, holding it through the financial crisis before selling to a group led by Strategic Value Partners in 2012. SVP's acquisition marked the beginning of a 13-year ownership period that ended in the 2025 bankruptcy filing. Under SVP ownership, the company pursued an expansion strategy that culminated in its largest-ever acquisition.

The LINPAC Transformation.

In July 2017, Klöckner Pentaplast completed the acquisition of LINPAC Group, a European producer of films and rigid containers for food packaging. The transaction, described as the biggest-ever acquisition for Klöckner Pentaplast, created a combined entity with revenues exceeding $2 billion, approximately 6,300 employees, and 32 manufacturing locations across 16 countries. The deal expanded Klöckner Pentaplast's food packaging and container business, expanding its capabilities in food packaging conversion—a segment experiencing growth from changing consumer preferences toward convenience foods and sustainable packaging solutions.

The LINPAC acquisition also increased Klöckner Pentaplast's debt load. The company financed the transaction primarily through additional leverage, adding to obligations that would prove difficult to refinance as market conditions deteriorated. Eight LINPAC entities are among the 25 debtors in the 2025 bankruptcy case, including Linpac Group Holdings Limited, Linpac Packaging B.V., Linpac Packaging Limited, and several European subsidiaries. The acquisition built scale in food packaging to complement the company's pharmaceutical and medical packaging businesses, but the debt incurred to finance it contributed to the eventual restructuring.

Operations at Filing.

At the time of its chapter 11 filing, Klöckner Pentaplast operated as a diversified packaging films manufacturer with approximately 5,700 employees across its global footprint. The company's 31 manufacturing facilities span 18 countries, with significant operations in Germany, the United Kingdom, Spain, France, the Netherlands, and the United States. The company serves major sectors including food packaging (trays, containers, lidding films), pharmaceutical packaging (blister films, child-resistant packaging), medical device packaging (sterile barrier systems), and consumer products (labels, shrink films).

The company's product portfolio encompasses both rigid and flexible packaging solutions, with particular strength in thermoformed containers, extruded films, and specialty pharmaceutical packaging requiring regulatory compliance. Major customers include global food manufacturers, pharmaceutical companies, and consumer goods producers—relationships that the restructuring was designed to preserve through unimpaired treatment of trade claims.

Path to Financial Distress

Post-COVID Industry Contraction.

The packaging industry experienced a correction beginning in late 2021 as the pandemic-era demand surge reversed. During COVID-19, packaging manufacturers benefited from stockpiling behavior as customers built excess inventory to guard against supply chain disruptions. This temporary demand spike masked underlying market dynamics and encouraged capacity expansion across the industry. When supply chains stabilized and customers began destocking accumulated inventory, manufacturers like Klöckner Pentaplast faced declining order volumes against fixed cost structures sized for higher throughput.

The industry contraction was acute for European manufacturers. Klöckner Pentaplast's significant continental footprint—with major facilities in Germany, the United Kingdom, France, Spain, and the Netherlands—exposed it to the European energy crisis that began in 2022. Energy-intensive plastic film manufacturing operations saw cost increases as natural gas and electricity prices spiked following geopolitical disruptions. These energy cost pressures compressed margins when volumes were declining, creating a dual squeeze on profitability.

Raw material cost inflation further compounded the company's challenges. Plastic resin prices—driven by petrochemical feedstock costs—increased during 2021-2022 and remained elevated. While Klöckner Pentaplast could pass through some cost increases to customers, competitive pressure and contract structures limited pricing power, resulting in margin compression across multiple product lines. The combination of volume declines, energy cost spikes, and raw material inflation created sustained pressure for European packaging manufacturers.

Capital Structure and Debt Maturity Crisis.

Klöckner Pentaplast entered 2025 carrying approximately €2.32 billion in funded debt across multiple tranches. The prepetition capital structure reflected years of leveraged private equity ownership and acquisition financing:

The key issue was timing: a 2021 refinancing left approximately €1.85 billion in first lien debt maturing in 2026. As market conditions deteriorated and the company's financial performance declined, refinancing options narrowed. SVP attempted to address the maturity wall, injecting approximately €150 million in new equity in May 2023 to bolster liquidity and demonstrate sponsor commitment. However, this equity injection did not enable a refinancing on acceptable terms.

By August 2025, restructuring talks with lenders were underway. The company and its advisors cited operational headwinds and a debt load requiring balance sheet restructuring. With refinancing options exhausted and the 2026 maturity approaching, the company pursued a prepackaged chapter 11 to address the capital structure while preserving going-concern value and maintaining operational continuity.

Industry-Wide Pressures.

Klöckner Pentaplast's distress occurred against a backdrop of broader packaging industry challenges. The year 2025 saw packaging sector restructuring, with multiple companies across different segments addressing overcapacity and margin pressure. Capacity reductions became common as manufacturers right-sized operations built for pandemic-era demand levels.

Regulatory uncertainty added another layer of complexity. Extended Producer Responsibility (EPR) legislation gained momentum across multiple jurisdictions, requiring packaging producers to fund collection and recycling infrastructure. While EPR creates potential opportunities for companies positioned in sustainable packaging, the transition costs and compliance requirements added pressure to already-strained balance sheets. Plastic reduction targets and recyclability requirements further complicated demand forecasting for traditional plastic film products.

Prepackaged Restructuring

Restructuring Support Agreement and DIP Financing.

Klöckner Pentaplast executed a Restructuring Support Agreement on November 4, 2025—the same day it filed chapter 11 petitions, along with its Disclosure Statement. The RSA locked in support from the Ad Hoc Group of First Lien Lenders and holders of Second Lien Claims, leading to the near-unanimous voting results that followed. By negotiating the restructuring terms prepetition and soliciting creditor votes before filing, the company shortened the process to six weeks in bankruptcy court.

The DIP financing package totaled €984 million, structured as a combination of new money and roll-up of prepetition obligations:

The DIP lenders—the prepetition secured parties—provided the financing through Wilmington Savings Fund Society, FSB as agent. Pricing included SOFR/EURIBOR plus 3.00% cash plus 3.00% PIK for term loans, with additional premiums including a 5.00% PIK commitment premium, 7.00% PIK backstop premium, and 3.50% PIK SteerCo premium for steering committee members. The facility matured nine months after closing, providing runway beyond the anticipated emergence date.

The new money component served three primary purposes: funding working capital needs during the chapter 11 case, covering case costs and professional fees, and refinancing the prepetition Bridge Facility of approximately €134 million. The roll-up structure converted existing prepetition secured claims into postpetition DIP obligations with superpriority status, providing enhanced protections for participating lenders while simplifying the capital structure transition to exit.

Plan Voting Results.

The plan voting results demonstrated the breadth of creditor support for the prepackaged restructuring. Class 3, comprising First Lien Claims, voted 99.75% in favor by amount and 99.81% by number of ballots. Of 538 ballots received, 537 accepted the plan, representing €1,586,133,904.74 in claims. Class 4, comprising Second Lien Claims, voted 99.46% in favor by amount. Of 79 ballots received, 78 accepted, with only a single rejection representing 0.54% of claims by amount. The court noted the "extraordinary support" reflected in these voting results.

The near-unanimous support reflected several factors: the prepetition negotiation process that allowed creditors to shape plan terms before solicitation, the relative clarity of recoveries under the plan, and the preservation of going-concern value compared to alternative scenarios. The overwhelming vote also limited the risk of class rejection requiring cramdown.

Creditor Treatment Under the Plan.

The plan established nine classes with treatment designed to maximize value for senior secured creditors while maintaining operational continuity:

The treatment reflects the fundamental economics of the restructuring: first lien creditors, holding claims of approximately €1.44 billion, received 100% of the reorganized equity in exchange for their debt. This debt-for-equity conversion eliminated approximately €1.3 billion in funded debt from the balance sheet. Second lien creditors, holding approximately €317 million in claims, received a pro rata share of €17.5 million in exit financing—a recovery of roughly 5.5 cents on the dollar reflecting their junior position in the capital structure.

The plan left trade creditors and general unsecured claims entirely unimpaired. This treatment preserved supplier relationships essential to ongoing operations and avoided the disruption that impaired trade claims would create for a global manufacturing enterprise dependent on just-in-time raw material supply chains. The approximately $174 million in prepetition trade claims continued to be honored in the ordinary course.

Exit Financing and Post-Emergence Capital Structure.

The exit financing structure converts the DIP facility into permanent financing upon plan effectiveness. The Exit Facility replaces the DIP Facility with principal equal to allowed DIP claims plus the €17.5 million allocated to second lien creditors. The facility comprises two components: an Exit Credit Agreement and Exit Senior Secured Notes, with a five-year term providing runway for operational improvement and potential refinancing under normalized market conditions.

The exit financing eliminates ratio compliance requirements, a departure from typical leveraged credit facilities. This covenant-lite structure provides the reorganized company flexibility during the post-emergence period as it works to improve operational performance and adapt to evolving market conditions. The exit financing also provides substantial incremental capacity for potential future borrowing needs.

U.S. Trustee Objection.

The U.S. Trustee filed an objection on December 11, 2025, challenging the third-party releases included in the plan. The objection reflected the U.S. Trustee Program's standard position opposing non-consensual releases of non-debtor parties in chapter 11 plans—an issue that has generated significant litigation across circuits. The third-party releases in the Klöckner Pentaplast plan protected various parties including officers, directors, prepetition lenders, and professionals from claims related to their prepetition conduct and involvement in the restructuring.

The court overruled the objection and entered the Confirmation Order on December 16, 2025. The ruling reflects a trend of courts in the Southern District of Texas, a venue for large chapter 11 cases, approving consensual third-party releases in prepackaged restructurings where creditor support is overwhelming. The near-unanimous voting results (99%+ across impaired classes) bolstered the argument that affected parties had consented to the releases through the plan solicitation process.

Case Administration and Professional Engagements

First-Day Relief.

CFO Marc Rotella's First Day Declaration described the company's operations and financial position. The company obtained first-day relief during an emergency hearing on November 5, 2025, the day after filing. The approved motions established the framework for continuing operations during the restructuring:

• Joint Administration: Consolidation of all 25 debtor entities for procedural efficiency
• Complex Case Designation: Recognition of the case's international scope and complexity
• DIP Financing (Interim): Authorization of initial DIP draws via the Interim DIP Order to fund operations
• Cash Management: Continuation of existing bank accounts and intercompany cash management systems
• Factoring Program: Authorization to continue existing receivables factoring arrangements
• Wages and Benefits: Authority to pay prepetition employee obligations and continue benefit programs
• Trade Claims: Authority to pay critical vendor and trade claims in the ordinary course
• Tax Payments: Authority to pay prepetition taxes
• Insurance and Surety: Continuation of insurance programs, surety bonds, and letters of credit
• Customer Programs: Continuation of customer warranty, rebate, and service programs
• Utilities: Adequate assurance procedures for utility providers
• Tax Attribute Protection (NOL Motion): Procedures to preserve net operating loss carryforwards
• Creditor Matrix and Redactions: Consolidated creditor lists with appropriate redactions

The scope of first-day relief reflected the complexity of operating a global manufacturing enterprise through chapter 11. With facilities across 18 countries, thousands of employees, and supplier relationships spanning multiple continents, maintaining operational continuity required immediate court authorization across numerous categories of ordinary-course payments and business operations.

Professional Retentions.

The restructuring engaged advisory firms on both the debtor and creditor sides:

Debtors' Professionals:

Ad Hoc Group Professionals:

The company also retained more than 20 ordinary course professionals spanning legal, financial, tax, insurance, sustainability, and certification services across multiple jurisdictions, reflecting the global operational footprint and regulatory complexity of managing a multinational manufacturing enterprise through restructuring.

Case Timeline.

Debtor Entity Structure.

The 25 debtor entities span multiple jurisdictions and reflect the complex corporate structure accumulated through years of private equity ownership and acquisitions:

Lead Debtor: Kleopatra Finco S.à r.l. (Luxembourg)

Holding Companies: Infia Midco 1 Limited, Infia Midco 2 Limited, Kleopatra Holdings 2, Kleopatra Lux 2 S.à r.l., Kleopatra Senior Holdings GP S.à r.l., Kleopatra UK Limited, KP Holding GmbH & Co. KG, KP Holding Verwaltungs GmbH, KP International Holding GmbH, New Linpac Luxco 2 S.à r.l.

Operating Companies: Klöckner Pentaplast Europe GmbH & Co. KG, Klöckner Pentaplast GmbH, Klöckner Pentaplast Limited, Klöckner Pentaplast of America, Inc., Klöckner Pentaplast Verwaltungs GmbH, KPP Texas, LLC

LINPAC Entities: Linpac Group Holdings Limited, Linpac Holdings (Northern Europe) GmbH, Linpac Packaging B.V., Linpac Packaging Holdings S.L.U., Linpac Packaging Limited, Linpac Packaging Pontivy S.A.S., Linpac Packaging Pravia SA, Picnal France SAS

Numerous additional entities across Argentina, Belarus, Brazil, Canada, China, Czech Republic, Egypt, India, Italy, Jersey, Mexico, Poland, Portugal, Russia, Switzerland, Thailand, Turkey, UAE, and certain additional entities in Germany, Luxembourg, Netherlands, Spain, UK, and USA were excluded from the U.S. proceedings—continuing to operate under applicable local law while benefiting from the parent company's restructured capital structure upon emergence.

Frequently Asked Questions

What is Klöckner Pentaplast and what does it manufacture?

Klöckner Pentaplast (kp) is a Luxembourg-headquartered global manufacturer of plastic films and packaging solutions with approximately €2 billion in annual revenues. The company produces packaging for pharmaceutical blister packs (including child-resistant packaging), food containers and lidding films, medical device sterile barrier systems, and consumer products including labels and shrink films. With 31 manufacturing facilities across 18 countries and approximately 5,700 employees, Klöckner Pentaplast is a global packaging films producer. The company traces its origins to 1965 Germany and has operated U.S. facilities since 1979.

How much debt did Klöckner Pentaplast eliminate through bankruptcy?

The company eliminated approximately €1.3 billion in funded debt through its prepackaged chapter 11 plan. Pre-filing total funded debt stood at approximately €2.32 billion across multiple tranches including first lien term loans, first lien notes, second lien notes, revolving credit facilities, and bridge loans. The restructuring converted first lien debt into 100% of the reorganized equity while second lien creditors received a pro rata share of €17.5 million in exit financing. The exit financing replaces the DIP facility with a five-year term, providing substantially reduced debt service burden compared to the prepetition structure.

Who owned Klöckner Pentaplast before bankruptcy and who will own it after emergence?

Strategic Value Partners (SVP), a Greenwich, Connecticut-based distressed debt investment firm, owned the majority of Klöckner Pentaplast from 2012 when it acquired the company from Blackstone Group. The 2025 bankruptcy transfers 100% of the reorganized equity to first lien creditors—primarily institutional investors and distressed debt funds that held the company's secured loans and notes. This ends SVP's 13-year ownership period. SVP attempted to stabilize the company with a €150 million equity injection in May 2023, but could not refinance the debt load or prevent the restructuring.

What caused Klöckner Pentaplast's financial distress?

Multiple factors converged to create the financial distress. Post-COVID customer destocking reversed pandemic-era demand surges, reducing order volumes across packaging segments. The European energy crisis beginning in 2022 increased manufacturing costs for the company's substantial continental footprint. Raw material cost inflation compressed margins further. A 2021 refinancing left approximately €1.85 billion in first lien debt maturing in 2026, and the company could not refinance on acceptable terms as performance deteriorated. Despite SVP's €150 million equity injection in 2023, liquidity constraints persisted, leading to a comprehensive restructuring.

How fast was the Klöckner Pentaplast bankruptcy case?

The prepackaged plan was confirmed in 42 days—from the November 4, 2025 petition date to December 16, 2025 confirmation. This timeline reflects the pre-negotiated nature of the restructuring: the company executed a Restructuring Support Agreement on the petition date with key creditor support already secured, filed the plan and disclosure statement simultaneously with the chapter 11 petitions, and conducted prepetition solicitation that resulted in 99.75% first lien and 99.46% second lien acceptance. The anticipated plan effective date is February 2, 2026.

Will Klöckner Pentaplast continue operating after bankruptcy?

Yes. The restructuring was designed to preserve ongoing operations while addressing the capital structure. All trade creditors and general unsecured claims are unimpaired under the plan, meaning suppliers continue to be paid in the ordinary course. Customer programs, warranties, and service commitments continue unaffected. The company's 31 manufacturing facilities across 18 countries maintained operations throughout the bankruptcy process, with approximately 5,700 employees continuing in their positions. The DIP financing and exit financing structures ensure adequate liquidity for ongoing operations.

What is the LINPAC acquisition and how does it relate to the bankruptcy?

In July 2017, Klöckner Pentaplast completed its largest-ever acquisition by purchasing LINPAC Group, a European producer of food packaging films and rigid containers. The deal created a combined company with revenues exceeding $2 billion, approximately 6,300 employees, and 32 locations across 16 countries. The acquisition increased the company's debt load. Eight LINPAC entities are among the 25 debtors in the bankruptcy case, and the debt incurred to finance the acquisition contributed to the capital structure that required restructuring.

What is the relationship between Kleopatra Finco and Klöckner Pentaplast?

Kleopatra Finco S.à r.l. is the lead debtor and a Luxembourg-domiciled holding company in the Klöckner Pentaplast corporate structure. The "Kleopatra" naming convention reflects the private equity holding structure implemented during Strategic Value Partners' ownership. The complex corporate structure includes multiple Kleopatra-named entities (Kleopatra Holdings 2, Kleopatra Lux 2 S.à r.l., Kleopatra Senior Holdings GP S.à r.l., Kleopatra UK Limited) alongside the operating companies bearing the Klöckner Pentaplast name. This multi-layered structure reflects the private equity-owned multinational enterprise managing operations across numerous jurisdictions.

Did the U.S. Trustee object to the plan?

Yes. The U.S. Trustee filed an objection on December 11, 2025, challenging the third-party releases included in the plan. This objection reflects the U.S. Trustee Program's standard position opposing non-consensual releases of non-debtor parties in chapter 11 cases—a frequently litigated issue across bankruptcy courts. The court overruled the objection and confirmed the plan on December 16, 2025, finding the releases appropriate given the near-unanimous creditor support (99%+ across impaired classes) and the consensual nature of the prepackaged restructuring.

How does this bankruptcy affect Klöckner Pentaplast's customers and suppliers?

Customer and supplier impact is limited by design. The plan leaves trade creditors entirely unimpaired, meaning suppliers continue to receive payment in the ordinary course of business. Customer programs—including warranties, rebates, and service commitments—continue without interruption. The company obtained first-day authority to maintain customer relationships and honor all customer-facing obligations. For customers in food, pharmaceutical, and medical device packaging, this continuity is important given the regulatory compliance requirements and qualification processes associated with switching packaging suppliers. The restructuring addresses the capital structure without disrupting commercial relationships.

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