Paper Goods Maker’s Bankruptcy Sale Prompts Insolvency Concerns

A proposed asset sale by Royal Paper has drawn objections from the US Justice Department’s bankruptcy monitor and an unsecured creditors’ committee, which warned the company could end up administratively insolvent.

The US Trustee said a budget included in the paper products manufacturing company’s bankruptcy financing request doesn’t cover administrative claims. The objection was filed Monday in the US Bankruptcy Court for the District of Delaware.

Additionally, Royal Paper hasn’t submitted a wind-down budget, raising concerns about its ability to conclude the bankruptcy case, a Justice Department attorney representing the US Trustee said.

The Phoenix-based company filed for bankruptcy in ...