R. R. Donnelley & Sons Co. has issued a letter concerning the filing for bankruptcy on Monday, Aug. 11, 2014, by R.R. Donnelley Argentina (RRDA), a subsidiary of RR Donnelley, with the Argentine Court.
Thomas Quinlan, president and CEO of RR Donnelley, states that it was after much discussion, thought and consideration of many alternatives to preserve operations, that RRDA made the difficult choice to file for bankruptcy liquidation in Argentina after 22 years in operation.
The printing industry in Argentina has been struggling to be profitable for some time and the outlook for improvement of industry sales is not positive. The business of RRDA is not solvent. RRDA has experienced a decrease in sales and does not foresee any improvement in the foreseeable future. At every point in this decision, RRDA followed all Argentinian laws and regulations as they apply to these business decisions.
During the analysis of alternatives, many discussions and considerations took place including, among other things, the following:
• RRDA obtained a Programa de Reproducción (“Repro”) in September 2013. However, the local union elected not to sign it, thereby preventing RRDA’s proposed corrective actions and therefore worsening even more the economic and financial situation.
• For three months RRDA had multiple meetings directly with the national and local unions in advance of filing bankruptcy seeking a Crisis Prevention Plan (requesting a reduction of headcount in order to draw closer to profitability), but no solutions were acceptable to the unions.
• RRDA met with and filed a petition with the National Ministry of Labor proposing a reduction in headcount at the facility. This was also brought to the Provincial Ministry of Labor. Prior to filing for bankruptcy, both Ministries of Labor informed RRDA that they did not support the proposal.
• Because RRDA was left with no other solutions for the many crises it faced, including rising labor costs, inflation, materials price increases, devaluation, inability to pay debts as they become due and other issues, the independent decision was made to file for bankruptcy.
In arriving at the decision, neither RRDA nor RR Donnelley discussed its intentions with any other company, stakeholder or bondholder. We have absolutely no relation to the current situation with Argentina’s bondholders.
The bankruptcy petition filed on Aug. 11 was approved by the court shortly thereafter and a trustee was appointed. This was quickly done, as it is usual in these cases, so as to protect and preserve premises, workers, facilities and creditors. At base, the business of RRDA is not solvent and that reality was the sole driver of the business decision.