Philip Services Files Chapter 11

Philip Services announced that it and most of its wholly owned U.S. subsidiaries filed on June 2 voluntary petitions under Chapter 11 of the Federal Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas.

"Our existing debt is too high for our businesses. We currently have funding available, which will permit us to continue to operate while we pursue strategic alternatives. Our primary avenue is to pursue a sale of all or substantially all the assets of the company as a going concern pursuant to Section 363 of the Bankruptcy Code. We will seek bids in the market place for the company as a whole or by strategic operational unit and expect to present the highest and best bid or bids to the Court in August," said Robert Knauss, principal executive officer and chairman of the Board. "We are also exploring a traditional reorganization." The company has engaged Jefferies & Co., Inc., as its financial advisor and investment banker.

"We will continue to provide our customers with the high level of service that we have delivered in the past," continued Knauss. "We have Court approval to pay employees in the normal course and continue their ordinary course benefits," continued Knauss. “

The company is financing ongoing operations through a consensual use of cash collateral released by a senior secured lender, Foothill Capital Corp.

While the current funding together with operating cash flow is expected to be adequate, a final hearing on the cash collateral funding has been set for June 23. The company can provide no assurance that the current funding will, in fact, be continued at that time or that alternative funding will be available.