PORTLAND, Maine — The bankruptcy trustee and potential buyers of the shuttered pulp mill in Old Town are seeking approval of a temporary operating agreement as the precursor to a proposed $10.5 million sale.
They were scheduled to meet with a bankruptcy judge at 2 p.m. Wednesday to iron out the deal that would let interested bidder Expera Specialty Solutions operate the mill while the bankruptcy trustee works out the sale process.
Trustee Pasquale “Pat” J. Perrino said in a telephone interview he’s hopeful the parties will reach an agreement Wednesday.
Perrino and an attorney for the mill’s seller, Patriarch Partners, had been at odds in a hearing Tuesday about whether the interim operating agreement would commit the estate to setting aside $300,000 available to unsecured creditors, who claim about $9.2 million in debts.
Separately, creditors in the case are concerned about the speed of the schedule Wisconsin-based Expera has required to keep alive the deal for the mill’s pulp-making assets that potentially could restore the jobs of laid-off pulp mill workers.
The deal does not include Old Town Fuel & Fiber’s biorefinery or intellectual property associated with research into making wood-derived sugars into fuel.
The mill and biorefinery sold to Patriarch for about $19 million in 2008.
While the temporary agreement is separate from the final sale of the mill, creditors are concerned about the impact of that agreement on the proceeds they might ultimately see through the sale to Expera.
A letter filed in court Monday showed a management arm of Patriarch Partners had foreclosed on certain assets it held in collateral, getting an estimated $9.4 million to partially satisfy loans it gave to Red Shield Acquisition. It formed Red Shield to hold the papermaking equipment and other personal property of the mill.
The bankruptcy trustee has asked the court to hear the case on a quick timeline to satisfy Expera, but attorneys for two groups of creditors have raised concern that the terms of the sale agreement moving ahead could be unfair to them. The attorney for creditors Trico Mechanical Contractors and CCB Inc. wrote in a filing Monday that the timeline is not sufficient to investigate transactions such as the foreclosure between Red Shield and Patriarch.
On Wednesday, U.S. bankruptcy Judge Louis Kornreich will consider only whether to approve a temporary agreement for Expera to operate the mill, which includes a provision that if it’s not the eventual buyer, it would be compensated for the temporary operating expenses when the mill is sold.