BANGOR, Maine — The corporation that owns the land and buildings at the shuttered East Millinocket paper mill filed for Chapter 7 bankruptcy Friday.
GNP East Inc. listed assets of between $10 million and $50 million and liabilities of between $1 million and $10 million, according to the document posted on the U.S. Bankruptcy Court’s electronic case filing system. The corporation stated it has fewer than 50 creditors.
The auction of GNP East buildings and real estate, scheduled for 10 a.m. Wednesday, will be delayed by the latest filing, according to attorney Randy Creswell, who represents Pasquale “Pat” J. Perrino Jr., the trustee appointed earlier this month to shepherd the mill through bankruptcy.
“The immediate impact is no auction going forward unless there’s relief from the stay granted by the law,” Creswell said Friday. “I would say [an application to allow the bankruptcy to proceed] is unlikely, but it is hard to say.
“It’s not to say that they couldn’t get a relief from the stay at some point, but I don’t think it’s likely they would get it on an emergency basis and I am not even sure they would ask for it,” Creswell added. “The automatic stay is there forever until somebody gets an affirmative order from the
court.”
The auction, which is not part of the bankruptcy process, was ordered by a Superior Court justice in May so Northern Construction Services of Glenburn could recoup the $242,000 it is owed. Attorney Curtis Kimball, who represents Northern Construction Services, did not immediately return a telephone message left at his office Saturday.
Originally scheduled for Oct. 15, the auction was delayed because of the Chapter 7 bankruptcy filing of GNP Maine Holdings LLC, which owns the mill’s papermaking equipment. That firm filed for bankruptcy in Delaware last month. The case was transferred to Maine at the request of major creditors and is pending in bankruptcy court in Bangor along with the GNP East case.
GNP Maine Holdings owes $65 million to its creditors but has just $28.15 million in assets, according to documents filed Oct. 3 that outlined in detail its assets and liabilities.
The money owed to companies and individuals that have secured claims either through liens or court judgments against GNP Maine Holdings totals $42.34 million, including $20 million owed to Stonehenge Community Development of Baton Rouge, Louisiana, and $20 million to Enhanced Capital New Market Development Fund of New Orleans, Louisiana, which hold mortgages on the mill.
Unsecured creditors are owed $22.6 million.
The company owes laid-off workers nearly $140,000 in wages, salaries and commissions to its employees, 212 of whom were laid off Feb. 6 when the mill shut down. About 20 hourly and salaried employees have remained employed to maintain the property, according to court documents.
The deadline for GNP East to file similar detailed financial information is Oct. 31.
Creswell said Tuesday that Perrino would try to fashion a deal that reconnects the real estate, buildings and papermaking equipment under one corporation.
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.
Creswell said Friday he believes GNP East’s filing will make finding an investor to reopen the mill easier, at least in the short run.
“It increases the chances that this can sell the assets to a potential operator than not or to have it all sold off piecemeal,” Creswell said. “It doesn’t mean that we’re going to get an operator, but we are certainly going to try.”
BDN writer Nick Sambides Jr. contributed to this report.