Mercer International and one non-operating subsidiary opened voluntary prepackaged Chapter 11 cases on Nov. 9, asking a Houston bankruptcy court to carry out a recapitalization aimed at cutting senior-note debt and raising about $400 million in new capital. The mills and lumber operations were not made debtors.
The filing is a balance-sheet case wrapped around a supplier whose pulp goes into toilet paper, tissue and towels, and whose lumber goes into residential construction, with operations in the United States, Canada and Germany. Mercer said its operating subsidiaries have not commenced cases and will not be parties to them, and that they will continue in the ordinary course, according to the company's announcement.
A Prepack, Not a Shutdown
Prepackaged, in this setting, means the support was lined up before the petition. Mercer said holders of more than 88% of the aggregate outstanding principal of its 2028 and 2029 senior notes back the restructuring agreement. The company filed a plan of reorganization in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.
The legal line around the case is deliberate. Mercer and one non-operating subsidiary are the debtors. The operating subsidiaries, the company said, have not filed and will not be parties. Day to day, Mercer has said those businesses will keep running, and it intends to fund operations during the cases with cash on hand and cash generated from operations.
Juan Carlos Bueno, Mercer's president and chief executive, has said operations are continuing normally and that the company is focused on employees and business partners. That is a management assurance, not a court finding that every contract, vendor bill or payroll cycle is untouched. It does mark what this filing is not: a liquidation of the pulp mills or the lumber side.
What the Recapitalization Would Change
The company expects to bring approximately $400 million of new capital into the business through a fully backstopped rights offering. Backstopped, as Mercer described the deal, means the offering is supported so the capital is expected to come in rather than depending on every holder taking a full allocation. Completion still waits on court confirmation and other conditions.
On the debt Mercer already has, the company said it expects to reduce existing senior-note debt by approximately 88% and eliminate more than $100 million of annual cash interest payments. Those are company projections tied to the plan, not interest checks already stopped. Law360 described the prepackaged plan as a restructuring of $1.6 billion of funded debt that would hand control of the company to creditors.
Cleveland.com reported a related aim to bring debt from $1.6 billion to around $700 million. That figure is not the same claim as an 88% cut in senior notes. Senior-note debt and total funded debt are different stacks, and the company's own release speaks to the notes and the interest bill, not to a residual $700 million. Readers can hold both descriptions without treating them as one arithmetic result.
Who Would Own the Company Next
Control is the other half of the bargain. Law360 said the plan would hand the company to creditors. Cleveland.com reported the split that would do it: senior noteholders would receive 91.5% of the new common stock, and owners of existing shares would receive 8.5% of the new common stock plus 3.5% of new convertible preferred stock.
That is proposed treatment under a plan that still needs confirmation, not a distribution that has already been made and not a final account of what any one shareholder walks away with. The restructuring, as described in that reporting, would transfer ownership to senior noteholders. Existing public holders would keep a minority position in the new equity rather than the company as it is capitalized now.
Mercer expects Nasdaq to suspend trading of its existing shares. As of this week, that remains an expectation the company has stated, not a trading halt independently recorded here. For holders, the practical sequence is the one the plan describes: a court process in Houston, a new capital structure if the plan is confirmed, and a market in the old shares that the company expects Nasdaq to shut.
The Quarter the Filing Followed
The petitions came days after another losing quarter. In the third quarter of 2026, Mercer reported a net loss of $59.2 million, or $0.88 per share, in its results. Operating EBITDA improved to negative $2.9 million, from negative $28.1 million in the third quarter of 2025. Better than a year earlier, and still red.
A Benzinga transcript of the earnings call reported a split inside that result. The pulp segment had positive quarterly EBITDA of $6 million. Solid wood had negative EBITDA of $7 million, which the transcript attributed to weak demand and high fiber costs. Those segment figures are from the call coverage, not a restatement of the consolidated Operating EBITDA line.
On its own site, Mercer says demand for natural, fiber-based products such as tissue, towels and specialty papers is growing robustly. That is the company's market claim, sitting next to a quarter in which the consolidated result was still a loss and the wood business, on the call, was the side in the red. The filing does not, on this record, identify that demand statement as the reason for Chapter 11. The interest bill the company wants off the books is a more direct explanation of what the plan is built to change.
Pulp Mills, and a Lumber Business Beside Them
Mercer says its consolidated annual pulp production capacity is approximately 2.1 million tonnes, 88% of it northern bleached softwood kraft, or NBSK. That 88% is a product mix, not the 88% of note principal supporting the deal and not the 88% senior-note reduction. Same digits, three different denominators.
NBSK is the grade used in toilet paper, tissue paper and paper towels. Mercer also produces pulp used in paperboard, cartons and specialty commercial shipping papers, and it operates several lumber facilities that produce lumber for residential construction and other building projects. The company describes that footprint as running in the United States, Canada and Germany.
Those operating assets are the part of the story the petitions are written to leave alone. If the company's account holds, customers ordering pulp or lumber are dealing with subsidiaries that are not Chapter 11 debtors, funded during the cases by cash already in the business and cash the operations generate. The Houston case is aimed at the parent-level capital structure, not at idling its pulp mills.
Year-End, If Houston and the Regulators Agree
Mercer expects to complete the recapitalization by the end of calendar year 2026. That timetable is an expectation, not a date the court has locked in. The company said completion is subject to conditions, including confirmation of the plan and regulatory approvals. A plan on file in Houston is not a confirmed plan.
Bueno has said Mercer looks forward to completing the process on schedule and emerging stronger. Between that sentence and an actual exit sit the confirmation hearing the court has not, on this record, been shown to have held, the regulatory approvals the company itself listed as conditions, and the rights offering that is supposed to deliver the new capital. Nothing in the announcement establishes that any of those steps has already cleared.
What is in front of the court is a creditor-supported attempt to trade a heavy senior-note coupon for a smaller note balance, about $400 million of backstopped capital, and a company whose new common stock would be mostly in noteholder hands. The mills, if Mercer is right about the boundary of the cases, are supposed to keep making pulp and lumber while Houston decides whether that trade can close before the year runs out.
