Orchids Paper Products Again Files for Chapter 11 : Bankruptcy: La Habra firm emerged from protection from creditors last April. No layoffs are expected during the reorganization.

Orchids Paper Products Co., a privately held manufacturer of paper towels and other paper products sold under a variety of brand names, said Tuesday that it has filed for bankruptcy protection for the second time in two years.

The Chapter 11 filing allows current management to continue operating the company, which has sales of $85 million a year. No layoffs are expected among the company’s 500 employees at five plants nationwide.

The bankruptcy petition, filed Monday in U.S. Bankruptcy Court in Santa Ana, lists assets of about $56 million and liabilities of $75 million. The company has 120 days to present to the court a plan to repay creditors and reorganize its debts.

“The industry outlook is excellent, but the company and its largest secured creditor, CIT Group/Business Credit, agree that Orchids Paper Products needs to restructure its balance sheet to take advantage of this outlook,” said Frank R. Budetti, interim president and chief executive officer since Oct. 6.

CIT is owed $58 million and will likely take control of Orchids under a reorganization plan that the two companies will file jointly, Budetti said. It hasn’t been determined yet how much of the company CIT will take over.

Orchids Paper is 55% owned by a group of previous management personnel. The rest is owned by a group of companies that were unsecured creditors when Orchids entered Chapter 11 in late 1992. It emerged from that filing in April.

Budetti said that the previous reorganization “failed to correct the weaknesses in the company’s financial structure.”

From two plants in Pryor, Okla., and plants in La Palma, Flagstaff, Ariz., and Cartersville, Ga., Orchids makes paper towels, napkins and bath and facial tissue that are sold under private labels like Alpha Beta’s Sunny Select and under the company’s own Colortex and Velvet brands.