PORTLAND, Maine — The next major step in the bankruptcy of Great Northern Paper Co. will be to determine whether court proceedings will move to Maine from Delaware, where the case was filed.
A Bangor judge Wednesday filed an order in line with federal bankruptcy law, calling for a Delaware court to handle that decision before a petition entered by three creditors in Bangor moves ahead.
Jeremy Fischer, the attorney representing the creditors that have claimed they are owed a collective $413,877 from GNP Maine Holdings, said Wednesday it is likely a request to the Delaware court to move the case to Maine will be made.
That’s one of many questions remaining after the bankruptcy filing from the holding company for the GNP mill in Millinocket, a project managed by the New Hampshire private equity firm Cate Street Capital.
Those questions remained largely unanswered because the company and its legal representatives have not been available for comment after the filing.
The impact on other Cate Street projects, some of which are targets of lawsuits in other states, remains unclear as do the prospects for the East Millinocket mill. Cate Street also is the firm behind the proposed Thermogen wood pellet mill in Millinocket that has missed multiple construction deadlines and lost millions in financing since it was first proposed.
John Williams, president of the Maine Pulp and Paper Association, said Wednesday it’s still too early to say what the possibilities are for the East Millinocket mill, but its best prospects likely would involve an investor that could support new equipment to produce higher grades of paper.
“The East Millinocket mill is still intact and could be a good mill, but they have to find an investor to put some money into it. But that’s a difficult thing to find in the paper industry right now,” Williams said.
George Gervais, commissioner of the Maine Department of Economic and Community Development, said Tuesday the state agency continues to seek investors for the mill that the company shuttered in January in order to reconfigure its business plan.
That effort involved negotiations with hydropower provider Brookfield Renewable Energy Partners to share profits from power sold back to the grid, a plan to develop a long-term wood supply strategy and improving its papermaking process. Mill leaders had an initial goal of restarting operations May 1, a deadline that was continually pushed back without any clear sign whether the company would restart the mill or not. Until Tuesday.
The filing for Chapter 7 liquidation suggests the company does not intend to reorganize its debt to restart the mill. The reason for the bankruptcy filing in Delaware is in part because that is where the holding company that owns the mill is incorporated. The state has some income tax benefits for holding companies.
Lois Lupica, a professor at the University of Maine School of Law and an expert in bankruptcies, said many corporations also file for bankruptcy in Delaware or New York because the volume of cases has led to a higher sophistication and streamlining of processes in handling bankruptcy cases.
For the about 1,000 creditors owed money from GNP, the company estimated in its filing that there would be some money to pay its unsecured creditors, who are the last in line to receive any funds from the bankruptcy process.
The company stated in its bankruptcy filing Tuesday that it has between $50 million and $100 million in both debts and assets, but the company has not completed its bankruptcy filing, which still requires more detailed statements of its assets and liabilities. The Delaware court ordered the company to file those documents and others by Oct. 7.
The court has appointed a trustee in the case, Charles Stanziale of the New Jersey law firm McCarter and English, to take responsibility for investigating GNP’s assets and distributing them to the creditors. Stanziale was not available for comment Wednesday.