OLD TOWN, Maine — A loan was approved Thursday to allow Red Shield Environmental to continue to operate in idle mode pending next month’s bankruptcy hearing to determine the fate of the facility.
The final bankruptcy hearing was supposed to be held Wednesday, but was postponed until Sept. 2 to give all the parties involved time to iron out some details regarding the financing, Red Shield attorney Bob Keach of Portland said.
If approved by a bankruptcy judge, a longer-term financing agreement would allow Red Shield Environmental LLC and its affiliate, RSE Pulp & Chemical, to borrow $13.6 million from Woodside Capital Partners of Massachusetts. The out-of-state company specializes in assisting companies that are having financial difficulties and need to restructure.
After filing for Chapter 11 bankruptcy in June, Red Shield received permission in late July to operate in idle mode in anticipation that the mill could be started up again. With the postponement of this week’s hearing, the company officials needed to borrow about $220,000 to keep the mill idle for about two weeks.
U.S. Bankruptcy Judge Louis H. Kornreich approved the loan Thursday at a hearing in Portland.
“All parties conceded to that,” Keach said.
He noted in a previous interview that this timeline is typical of complicated bankruptcy cases such as Red Shield’s and said he still thinks the outcome will be positive.
When Red Shield and RSE filed Chapter 11, the companies laid off about 160 employees.
Company officials blamed recent spikes in material and fuel costs for the financial troubles but are hopeful that Red Shield can reopen and continue with the plan to build an ethanol production pilot plant in conjunction with the University of Maine.