BANGOR, Maine — A federal judge in Delaware on Friday granted a motion to move the pending bankruptcy of Great Northern Paper Co.’s East Millinocket operation to Maine.
More than 20 creditors, including the towns of Millinocket and East Millinocket and the Maine attorney general, asked that the case be moved from Delaware to bankruptcy court in Maine because 56 percent of the 1,159 creditors are within the state. Attorneys for GNP objected to having the case moved from the state where the company was incorporated, in part, because a new trustee would have to be appointed to administer the case.
“We are pleased the court agreed that this issue is of great importance to the people of the state of Maine and that moving the proceedings from Delaware to Maine was in the public interest,” Timothy Feeley, spokesman for the attorney general, said Friday in an email.
Efforts to reach officials in East Millinocket and Millinocket on Friday were unsuccessful.
“The towns now will be able to play an active role in what transpires in a way that would have been difficult if the case had remained in Delaware,” D. Sam Anderson, the Portland attorney who represents East Millinocket and Millinocket in the bankruptcy, said.
Efforts to reach attorneys for GNP were unsuccessful Friday.
A hearing on the motion to move the case was held at 12:30 p.m. Friday in U.S. Bankruptcy Court in Wilmington, Delaware, before U.S. District Judge Mary J. Walrath. The judge said she granted the motion “in the interests of justice” and “for the convenience of the parties.”
Because of the mill’s location, the case will be assigned to bankruptcy court in Bangor and U.S. District Bankruptcy Judge Louis H. Kornreich, who has handled mill bankruptcy cases.
Documents filed late Thursday with the bankruptcy court showed t he company that owns the East Millinocket paper mill owes $65 million to its creditors but has just $28.15 million in assets.
The money owed to companies and individuals that have secured claims either through liens or court judgments totals $42.34 million, including $20 million owed to Stonehenge Community Development of Baton Rouge, Louisiana, and $20 million to Enhanced Capital New Market Development Fund of New Orleans, Louisiana, which hold mortgages on the mill.
Unsecured creditors are owed $22.6 million. The company listed nearly $117,500 in accounts receivable in its bankruptcy filings.
GNP Maine Holdings LLC owns the East Millinocket papermaking operation that has been shuttered since Feb. 6, when a majority of the 212 workers were laid off. About 20 hourly and salaried employees have remained employed to maintain the property.
Attorneys for Charles A. Stanziale Jr. of Newark, New Jersey, the trustee assigned in Delaware to oversee the bankruptcy, opposed moving the case to Maine.
“The trustee has undertaken significant efforts to preserve estate value for the benefit of all creditors and has generally attended to the administrative needs of the bankruptcy estate,” Mark D. Olivere of Wilmington, Delaware, said.
Olivere said that Stanziale had addressed many of the concerns expressed by attorneys for Millinocket and East Millinocket including: arranging for 24-hour security at the mill, staffing the operation of the wastewater plant, ensuring proper heating at the mill during the winter months, and begun discussions with unnamed parties interested in acquiring GNP’s assets.
The company owes laid-off workers nearly $140,000 in wages, salaries and commissions, according to a detailed list of assets and creditors filed late Thursday.
GNP filed for Chapter 7 bankruptcy Sept. 22, less than a week after three creditors — Hartt Transportation Systems of Bangor, Lynch Logistics and Lynco Inc. — filed a petition in U.S. Bankruptcy Court in Bangor that, if granted, would have forced the mill owner into bankruptcy.
Those companies along with 20 other Maine-based companies petitioned to have the case moved to Maine. The towns of Millinocket and East Millinocket and the attorney general’s office supported that motion.
“We felt all along that it was in the public interest to have the case in Maine,” said Portland attorney Jeremy R. Fischer, who represented the businesses. “It’s rare to get a bankruptcy case moved. One reason the judge [in Delaware] was willing to move it was this big coalition of partners who supported it.”
Fischer said that he expected the transfer of the case would take place next week and a meeting of creditors would be held before the end of the month.
Chapter 7 of the federal bankruptcy code allows the company to liquidate its assets to pay creditors. Corporations seeking to reorganize typically file under Chapter 11, though filings can be converted.
GNP Holdings owns the business and equipment but not the real estate, which is owned by other corporate entities.
GNP Assets
— Real property: $16.5 million
— Personal property: $11.65 million
— Total: $28.15 million
GNP Liabilities
— Secured creditors: $42.34 million
— Unsecured creditors: $22.6 million
— Unpaid wages/salaries: $139,000
— Total liabilities: $65.08 million