BANGOR, Maine — East Millinocket will receive six months of wastewater treatment from a bankrupt paper mill, after a federal judge on Thursday allowed the mill’s estate to loan as much as $250,000 to the town to cover treatment plant operations.
U.S. District Court Judge Louis Kornreich granted trustee’s attorney Shawn Doil’s request to offer the $250,000 loan during a brief appearance at the Margaret Chase Smith Federal Building.
The money, Doil said, will come from the estate of GNP Holdings, one of two Great Northern Paper Co. corporations that have filed for Chapter 7 bankruptcy protection. That estate has $1.2 million in assets to secure the loan. The town and state have until Aug. 5 to repay it, she said.
“The benefit here is to give the town and state time to figure out how they want to operate the plant,” Doil said Thursday. “It will clearly be net neutral for the estate.”
The Aug. 5 repayment will allow GNP Holdings’ unsecured creditors to collect some portion of what they are owed. Complex bankruptcy cases such as the mill’s usually take at least six months to be resolved, Doil said.
The mill had primary and secondary water treatment facilities, used as part of its papermaking operations, and for decades had treated town and state wastewater as well for nominal fees.
That arrangement came to an end when Hackman Capital Partners of Los Angeles successfully bid to buy the paper mill for $5.4 million on Dec. 2.
Hackman declined to operate the plant, which serves 800 customers in East Millinocket and cleans the leachate from the state-operated Dolby landfill.
East Millinocket’s Board of Selectmen voted 4-0 during a special meeting on Wednesday to agree to the $250,000 loan. The town received on Dec. 8 from the mill sale $712,435 of the $767,392 in pro-rated property and real estate taxes the facility’s former owner owed the town for the present and 2013-14 fiscal years.
Town Administrative Assistant Angela Cote has said that a consultant is studying the treatment plant to help town leaders determine their options for operating the plant, which include establishing a water district. No decisions have been made.