Vancouver-based Mercer International Inc. has filed for prepackaged Chapter 11 to restructure its balance sheet and recapitalize its business. The forest products company and one of its non-operating subsidiaries filed their cases in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. Its operating subsidiaries are not part of the proceedings.
Note: Chapter 11 allows businesses to reorganize their debts while continuing operations under court supervision. A Chapter 11 filing does not necessarily mean that a business is closing. For additional information, readers are encouraged to contact the business directly.
Overview of the Filing
Court records on the PACER database show that Mercer International Inc. submitted its petition on November 9.
According to the company’s press release, the filing is part of a restructuring support agreement backed by holders of more than 88% of the outstanding principal amount of its 12.875% senior notes due in 2028 and 5.125% senior notes due in 2029.
The company, along with Mercer International (Texas) LLC, has also submitted a prepackaged reorganization plan to the court.
Mercer said its operating subsidiaries will continue serving customers, working with suppliers, and paying employees in the ordinary course. It expects to complete the restructuring by the end of 2026, as per court confirmation, other plan conditions, and regulatory approvals.
Company Plans to Reduce Debt Through Recapitalization
The press release shows that the plan is expected to reduce existing senior note debt by about 88% and save more than $100 million in annual interest payments. The plan also includes about $400 million in new funding through a fully backed rights offering.
A WoodCentral report previously showed that bondholders would exchange about $1.1 billion in debt for 91.5% of the reorganized company’s new shares. Existing shareholders would retain the remaining 8.5%. The report added that the bondholders would support the $400 million rights offering and receive a $56 million premium in new notes.
The restructuring remains subject to court confirmation of the plan and the satisfaction or waiver of other conditions.
Mercer said it will rely on its existing cash and business-generated funds to meet operating expenses during the proceedings. CEO Juan Carlos Bueno said the filing was a planned part of the company’s recapitalization and confirmed that business activities would continue as usual.
Filing Follows Financial and Refinancing Pressures
S&P Global Ratings revised Mercer’s issuer credit rating from B- to CCC+ and assigned a negative outlook, reflecting ongoing financial pressures facing the company. These were tied to higher fiber costs, weak cash flow, lower pulp prices, and challenges in refinancing debt.
It also shows that Mercer had almost zero adjusted EBITDA in 2025. For 2026, the agency expects adjusted EBITDA of about $100 million and a cash flow shortfall of around $90 million. These are S&P’s estimates, not the company’s reported full-year results.
Case Related Details
Mercer International Inc. currently faces between 1,000 and 5,000 creditors. The company’s chief financial officer, Richard Short, signed the petition before it was submitted.
Attorney Timothy A. (“Tad”) Davidson II of law firm Hunton Andrews Kurth LLP is legally representing the company.
According to the press release, Houlihan Lokey is the company’s investment banker. Alvarez & Marsal is its financial advisor. Hunton Andrews Kurth LLP, Latham & Watkins LLP, and Sangra Moller LLP are its legal counsel.
Ducera Partners LLC is advising the Ad Hoc Group. Paul, Weiss, Rifkind, Wharton & Garrison LLP is its legal counsel.
Stretto, Inc. is handling claims and the solicitation process for the recapitalization.
A summary of the Chapter 11 petition is given here:
- Filing Date: November 9, 2026
- Court and Jurisdiction: U.S. Bankruptcy Court for the Southern District of Texas
- Type of Filing: Active, Voluntary Petition
- Chapter: 11
- Case Number: 26-90829
- Estimated Assets: Between $1,000,000,001 and $10 billion
- Estimated Liabilities: Between $1,000,000,001 and $10 billion
- Estimated Creditors: Between 1,000 and 5,000
About the Company
Mercer International Inc. operates as a producer of market pulp and solid wood products. Product offerings are softwood and hardwood pulp, cross-laminated timber, pallets, lumber, and pellets. It also generates electrical and thermal energy using biomass byproducts from its pulp and sawmill operations.
The company website shows that it operates modern production facilities in North America and Europe. Its major operations include pulp mills, sawmills, and mass timber facilities. In recent years, the company has grown through acquisitions, including Structurlam’s mass timber assets in 2023.
Mercer International Inc.’s financial footing could be reshaped through the upcoming court rulings.
