Richmond, BC-based Catalyst Paper announced yesterday that it has filed for bankruptcy protection under the Supreme Court of British Columbia's Companies' Creditors Arrangement Act (CCAA). The specialty paper producer is moving to restructure its debt and operations.

According to a news release, the company's operations are intended to continue as usual during the restructuring process. Catalyst also says it expects to meet its obligations to employees and suppliers.

The company previously announced a consensual recapitalization transaction under the Canada Business Corporations Act (CBCA), which would have been key for a voluntary restructuring plan.

One of the conditions was that a new labour agreement would have to be ratified by all six union locals at the company's BC mills. However, workers at Catalyst rejected the new contract that was presented. A research analyst told the Vancouver Sun that Catalyst Paper workers will likely live to regret this decision.

The second condition was the support of two-thirds of Catalyst's note holders, which also failed.

"Our debt restructuring objective remains clear and unchanged though our path forward was altered by recent setbacks," said Kevin Clarke, president and CEO. "Without the new labour agreement, and without two-thirds support of 2014 note holders, the economics of the previously announced consensual restructuring transaction was undermined."

Clarke said that after reviewing the matter with the company's Board of Directors, Catalyst will begin the CCAA proceeding for creditor protection. "The board, management and our advisors believe this approach will best facilitate the completion of a recapitalization transaction that delivers the improvements to our liquidity and capital structure which are necessary to put our company on firm financial and competitive fooling in the current business and economic environment," continued Clarke.

A statement from the company says that Catalyst management will remain responsible for day-to-day operations at the company. The terms and conditions of the restructuring plan have not yet been determined by the company.