December 09, 2019
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Great Northern Paper files for bankruptcy, lists more than 1,000 creditors

Jon Campbell | BDN
Jon Campbell | BDN
The Katahdin Avenue industrial park in Millinocket is a shell of what it was in this picture taken on May 4, 2014. The stripping down of the former mill site was part of a Great Northern Paper Co. LLC effort to revitalize the East Millinocket paper mill and start a $140 specialized pellet mill in the park.

EAST MILLINOCKET, Maine — Great Northern Paper Co. LLC filed for bankruptcy protection in a Delaware court Tuesday, listing more than 1,000 creditors and at least $50 million in debt.

Great Northern’s Chapter 7 bankruptcy filing might have been spurred by advance word of a petition filed Tuesday by three creditors in federal bankruptcy court in Bangor, forcing the company into involuntary bankruptcy.

Chapter 7 of the federal bankruptcy code allows the company to liquidate its assets to pay creditors. Corporations seeking to reorganize typically file under Chapter 11, though filings can be converted.

Three Great Northern creditors signed a petition filed Tuesday, saying they were owed $413,879. Hartt Transportation Systems of Bangor is owed $227,528. Lynch Logistics, which is owed $176,487, and Lynco Inc., which is owed $9,862, also signed the petition.

Jeremy Fischer, a Portland-based attorney for the petitioners, wrote in an email Tuesday that his clients had no advance notice that GNP planned to file for bankruptcy in Delaware. Fischer wrote that bankruptcy is his clients’ “last resort” for recovering any money after a judgment the creditors won in state court in May.

“Even after the petitioning creditors obtained stipulated judgments in May 2014 in Maine state court, GNP failed to make any offer of repayment and refused to provide basic disclosures about its financial affairs,” Fischer wrote.

Fischer wrote that because the company filed for bankruptcy in Delaware around the same time as the petition, there could be some question about where that case would proceed. Since most creditors are in Maine, he wrote it is likely that the Delaware court would move the venue to Maine, if asked.

Great Northern Paper spokeswoman Alexandra Ritchie did not immediately return a telephone message seeking comment.

George Gervais, commissioner of the state’s Department of Economic and Community Development, said the bankruptcy filing does not change his department’s focus on finding a new investor to operate the East Millinocket mill.

“Our focus will remain on doing everything we can to find investors, buyers or operators for that property,” Gervais said. “Obviously, in the near term we’ll be dealing with a bankruptcy trustee rather than GNP directly.”

Gov. Paul LePage, i n a meeting with millworkers in East Millinocket in August, reiterated that his administration is committed to helping the mill find new ownership. Gervais said talks continue with potential investors, but he declined to get into specifics.

“As soon as we start talking about potential investors and what their desires are, then they run away and we lose that opportunity,” Gervais said.

United Steelworkers Union representative Duane Lugdon called the bankruptcy “unfortunate but probably predictable.”

He said the union, which represents the greatest portion of the 212 workers laid off from the mill on Feb. 6, will retain attorneys to ensure that the laid-off workers, and the 20 hourly and salaried workers still employed to maintain the property, have their interests protected.

“This company has been under a mountain of debt with no way to claw its way out of the hole,” Lugdon said. “They have given us assurances that there are people interested in owning the asset [East Millinocket’s paper mill] but frankly that has not come to fruition.”

“The truth is that they [GNP] have been underwater for a long time. They are being forced to do something here that they clearly would not like to do. They would have liked to survive in this business, but it was just impossible,” he added.

Though it started with great promise in 2011, Great Northern Paper’s last 1½ years have been brutal, with the company’s failure leaving its workers in limbo, Lugdon said.

The workers “are creditors just like some of the people who supplied the mill with various goods, so we want to see their interests taken care of,” he said. “Aside from that, we are looking to the court to ensure that if there is a viable entity out there that can buy the mill, they can be sold the mill and put the mill back on its feet.”

East Millinocket Selectman Mark Marston said he was “flabbergasted” at news of the bankruptcy.

“I am surprised. Hopefully, like we saw with Fraser Papers when they went bankrupt, maybe they will restructure and come back,” Marston said Tuesday, referring to the company that owned a mill in Madawaska and declared bankruptcy in 2009.

Marston expressed concern that the bankruptcy would lead to a dismantling of the paper mill, something he would oppose, he said.

“The town and state should look into eminent domain and running the mill if that were to happen,” Marston said. “And seeing if somebody else would buy it.”

“I was hopeful that they would be able to pull this off,” Marston said of Great Northern. “I had faith that this company was going to pull it out and make a go of it because they seemed very committed to helping the struggling paper mill and getting it back up to what it used to be.”

“I am also concerned that we would see here what happened in Millinocket,” added Marston, referring to the scrapping of the mill in the neighboring town.

East Millinocket selectmen met Monday to discuss whether to file a lien on the company in response to news that one of GNP’s numerous creditors, Northern Construction Services of Glenburn, scheduled an auction of the mill on Oct. 15 to collect its debt.

Maine Superior Court Justice Ann Murray ruled on May 20 that Northern Construction Services could sell the land and buildings encumbered by the lien in 90 days, according to documents filed with the court and the Penobscot County Registry of Deeds.

Northern Construction is listed as one of more than 1,000 creditors identified in documents filed with GNP’s bankruptcy. The lawyer for Northern Construction was not immediately available late Tuesday to explain the impact of the bankruptcy filing on that auction.

Millinocket Town Manager Peggy Daigle and Millinocket Town Councilor John Raymond said they were not surprised at the bankruptcy.

“In the year and a half that I have been here there have been a series of promises [from GNP] that never came to fruition. We had an agreement back in June where they were going to pay all their taxes and even that didn’t happen. So nothing surprises me about this company,” Daigle said.

“We have been dealing with them and the closer we get to talking with them the less they wanted to talk with us,” Raymond said. “They don’t want to face their problems.”

The company owes at least $658,657 plus interest in real estate and personal property taxes to East Millinocket and $657,700 to Millinocket in property taxes. It has slowly been paying back taxes to Millinocket through the scrapping of that town’s paper mill on the industrial park the company owns.

Delaware law firm Chipman Brown Cicero and Cole is representing GNP Maine Holdings, the parent company of Great Northern Paper mill that is, in turn, owned by another holding company, GNP Parent.

The project is managed by the Portsmouth, New Hampshire-based Cate Street Capital, which is the corporate nexus for the various entities that own the paper mill and a related planned venture, Thermogen Industries.

Both Thermogen and GNP Maine Holdings are owned in part by Great Northern Ventures LLC, CSC Group Holdings, Cate Street Capital and Jenis Investments LLC, according to court records and documents submitted to the Finance Authority of Maine.

It’s unclear how ownership of GNP Holdings breaks down among its various parent entities or what the relationship among the various parent entities is.

As part of a separate defamation lawsuit against an industry newsletter, Cate Street disclosed that it is wholly owned by Jenis Investments. In a separate personal lawsuit, CEO John Halle testified that his wife owns Jenis and, in turn, Cate Street.

GNP’s voluntary bankruptcy filing stemmed from a resolution signed by the company’s board of directors Monday. The Delaware bankruptcy court indicated that the company’s initial filing is missing required documents, which would give more detail about who the company owes and how much.

GNP Holdings has until Oct. 7 to file those missing documents or risk dismissal of the case.

 

Correction: A previous version of this story incorrectly stated the number of workers still employed at the East Millinocket paper mill.


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