PORTLAND, Maine — Managers of the bankrupt Great Northern Paper Co.’s estate thought they had a plan to transfer two mill-operated wastewater treatment facilities to East Millinocket. But that plan short-circuited Tuesday afternoon.
The plan to deal with the wastewater facilities that neither the town, the new mill owners or the state are eager to own is now in limbo, according to the attorney for the bankrupt estate.
U.S. bankruptcy judge Peter Cary on Thursday granted the parties more time to sort out ownership of a transformer that provides electricity to the wastewater facilities, before the estate pursues its request to give up ownership of the wastewater plants.
The two plants process wastewater from the town and leachate from the Dolby landfill, which the state took over in 2011 as part of the deal for Cate Street Capital to move ahead with its purchase of the mill sites in Millinocket and East Millinocket for $1.
Attorneys for the town, the bankruptcy estate and various state agencies said Thursday that they were surprised by the dispute over the transformer, which stood to add at least another $40,000 to the town’s cost in buying the facilities to keep them operating.
Those attorneys said the mill’s new owner, California-based Hackman Capital, claimed ownership of the transformer they believe may instead be owned by Brookfield Asset Management.
The dispute puts a wrinkle in the plan to deal with the plant that Sam Anderson, East Millinocket’s attorney, said “has been a big mess from day one.”
“If the sale to the town doesn’t work out, we have a fairly big mess on our hands,” Anderson said Thursday.
Anderson said it was unclear as of Thursday whether Hackman was still willing to sell the transformer, or under what conditions, as a company official expressed that it may need to sell that transformer in connection with other assets.
Kevin Crosman, an assistant attorney general representing the Maine Department of Economic and Community Development and Department of Environmental Protection at Thursday’s hearing, said he expects the state would object to the bankruptcy estate’s request to abandon the wastewater treatment plant.
But the parties also noted further investigation may find that Hackman does not own the transformer.
At issue is the language of documents outlining the assets for sale in the mill’s bankruptcy auction, which Crosman said excluded any facilities deemed required or convenient to operate the wastewater plant.
That language, he argued, makes clear that the transformer was not sold to Hackman in the bankruptcy auction.
“It’s like giving over the car without the keys,” Crosman said.
The court agreed to extend the time that the bankruptcy estate can pay for power bills and maintenance at the wastewater treatment facilities until June 19. That authority was set to expire Friday.
A judge previously approved the bankruptcy estate spending up to $250,000, to be reimbursed later by the state and East Millinocket, to keep the wastewater facility operating.
Shawn Doil, the attorney representing the bankruptcy estate, said the estate had spent about $195,000 through Thursday and did not expect to come near the $250,000 as the town has taken over paying wages and salaries associated with the treatment plants.
The parties will return to court June 18 for another hearing on the bankruptcy estate’s intention to abandon the property, by which date Doil said she’s hopeful the parties will have reached an agreement on the plan to transfer the plants to the town.
If unsettled by then, the town or bankruptcy estate could request another extension or the issues could be put to the court to decide.
With the extension Thursday, the bankruptcy estate plans to abandon its obligations to the wastewater plants at midnight, June 20, with objections to that plan due to the court by June 19. It originally intended to abandon the property by Friday at midnight.