The former owner of the pulp mill in Old Town now faces allegations from investors that she overcharged clients by more than $200 million in fees, according to Bloomberg.
The news outlet reported investors Hannover Funding LLC and Norddeutsche Landesbank Girozentrale filed a lawsuit Friday against celebrity investor Lynn Tilton’s company Patriarch Partners LLC, which previously invested in certain collateralized loan obligation funds like the one invested in Old Town Fuel and Fiber.
Tilton and Patriarch face similar allegations from federal securities regulators in a separate lawsuit filed in April.
Both lawsuits concern fees associated with Patriarch’s collateralized loan obligation funds, by the name of Zohar I, III and III.
Tilton has counter-sued the U.S. Securities and Exchange Commission, arguing that her case should not go before the SEC’s in-house court system, a system her attorneys argue violates Tilton’s rights under the U.S. Constitution.
A spokesman for Patriarch told Bloomberg that the investors’ lawsuit “merely piggybacks” on allegations from the SEC.
Bloomberg reported the investors are seeking at least $44 million through the lawsuit in the New York Supreme Court in Manhattan. They claim they together put more than $135 million into two of Patriarch’s “Zohar” funds.
Duane Lugdon, a representative for the United Steelworkers union in Maine, told the Bangor Daily News after the SEC’s lawsuit that Tilton followed through on her promises to Maine workers.
Tilton bought the former Georgia-Pacific mill in a 2008 bankruptcy auction for $19 million. Her firm’s ownership ended last year, after creditors of the company formed to hold the mill assets in October petitioned for Red Shield’s bankruptcy. In December, the mill was purchased out of that bankruptcy by the Wisconsin paper maker Expera Specialty Solutions.