BANGOR – If Great Northern Paper Inc.’s plants in Millinocket and East Millinocket ever open again, it will be under new ownership.

Attorneys for GNP notified a federal bankruptcy court judge Wednesday that the mills have no intention of producing paper, just keeping the plants heated to protect assets – the machines, pipes and other equipment in the two massive facilities.

Possible buyers have walked through the facilities, the company told the court, but there hasn’t been a “white knight” to come forward as of yet to buy the mills and rescue its operations. Any purchase agreement would have to be approved by the bankruptcy court.

“A restart of the mills at this time is not practical … and not in the best interests of the estate,” said Harold Murphy, an attorney for GNP, to a courtroom filled with nearly 60 people. At least 20 others, mostly millworkers, were waiting in the hallway.

“We are not in production,” he said. “There’s not dispute on that. In the absence of funding, this mill will go down. This could never be revisited, your honor.”

Murphy’s comments countered a request he made last week that Judge Louis Kornreich review a controversial financial plan that would cover 13 weeks of operations, including bringing back the majority of the 1,130 workers already off the job for more than three weeks to process and fill awaiting orders.

That plan would have included $25 million in loans, and the temporary suspension of company payments to the workers’ 401(k) accounts and severance packages and retirees’ health care plans.

Murphy instead asked for, and got, permission to secure at most $2.3 million in additional loans through its two primary lenders, Congress Financial Corp. and BCC Equipment Leasing, to keep the facilities heated through midnight on Jan. 24.

And sometime next week, Murphy said GNP wants to submit a 13-week financial plan he called a “preservation budget” that would itemize what it would cost to keep the facilities heated during that time, plus fill orders from remaining inventories.

“If I don’t have any financing beyond today, this case, unfortunately, is going straight to liquidation,” Murphy told Kornreich.

Kornreich repeatedly asked Murphy why a 13-week financial plan couldn’t be worked out immediately, especially since Great Northern and its consultants already know it costs roughly $450,000 a week to keep the mills warm. They estimated that, excluding employee benefits, it would cost slightly more than $7 million over 13 weeks to preserve the assets during that time period.

“Why do we have to come back here and do this again?” Kornreich asked.

An attorney for one of the lenders offered one possible hint. Susan Boswell, who represents BCC Equipment Leasing, said, “Great Northern is working with the lender in the next 10 days to get this plant sold.”

Murphy, however, answered that “although I’m not certain that we’re going to learn anything new,” the detailed financial plan for preservation of the mills could have expenditures in it that no one is aware of now. Plus, he said, “it’s to provide comfort to our lenders.”

In the meantime, GNP is trying to find a “white knight” that could buy the mills and rescue their operations, Murphy said. But, he added, “there’s no assurances of that.”

A few prospective buyers have walked through the mills, testified Robert Calhoun, a company turnaround consultant hired by Great Northern last May. He acknowledged, however, that he was not told whether any of the shoppers were willing to buy the mills in the next 13 weeks.

If no buyer is found, a liquidation sale is possible, Calhoun admitted.

“The company cannot go on preserving [assets] forever without generating revenue,” he said.

Union officials, who told Kornreich that Great Northern is a “secretive company,” asked the judge to instruct the paper company to keep them informed about possible buyers.

The judge said no, citing concerns for confidentiality.

“There is no money”

In his approval of a temporary financing plan through Jan. 24, Kornreich disagreed with GNP that the company should suspend the payment of health care benefits to retirees, or halt its company-match to pension plans and employees’ 401(k) accounts.

The judge’s decision brought elation to employees and retirees who stayed around the federal courthouse all day, but that happiness was temporary.

Even though Great Northern is obligated to make those payments, Kornreich said it’s unlikely that most of those payments will be made.

The judge said $600,000 of the $2.3 million in loans should be set aside in a separate account to pay health care benefits to all employees, whether furloughed or part of a skeleton crew of 80 people maintaining the plant, the retirees and their dependents through Jan. 24.

But once that money is gone, it’s gone, he said.

“In plain terms, there is no money today or no money in the future to pay the benefits obtained,” Kornreich said.

All health care recipients and health services providers who are not paid by Great Northern would have an administrative claim against the company at a later date, the judge said, and they would receive priority status from the bankruptcy court in trying to obtain that money.

“[I] preserve the rights of those to pursue those benefits under the bankruptcy code,” Kornreich said.

“Basically, we’ve become creditors,” said Lucien Deschaine, international representative of the Paper, Allied Chemical and Energy Workers International Union.

Maine Health Alliance, which has a contract with Great Northern to secure health care providers in the Millinocket region, said doctors, pharmacies and Millinocket Regional Hospital could be hit with “significant and substantial” losses if Great Northern doesn’t pay its health insurance premiums.

“They simply can’t absorb the kind of costs that would be shifted [to them],” said Jeffrey Sternkalar, an attorney for Maine Health Alliance. “I don’t think the providers, at the end of the day, could afford to provide services for very long, if at all.”

On Friday, Great Northern, Maine Health Alliance and Millinocket Regional Hospital are scheduled to be in court to discuss a likely decision by Great Northern to get out of its contract with Maine Health Alliance because it puts the alliance and its health care providers “at risk.”

Unions not satisfied

Judge Kornreich’s decision to support temporary financing to Great Northern until Jan. 24 could be extended until Feb. 4, and his orders reflected that possible extension.

After his ruling, union representatives upset that Great Northern might not pay its health care premiums decided to tell their fellow members to limit the amount of medical or other health-related attention they seek in the next 10 days.

“We will advise our people to still use our medical benefits, but to use them sparingly,” Deschaine said.

They also are instructing their memberships to continue to pay their share of health care premiums even though it was mentioned in court earlier in the day that Great Northern has not accounted for that money in its temporary budget.

When asked where he thought employee contributions to health care plans was, one union worker said, “it’s in Canada.”

Great Northern is owned by Inexcon, a Quebec, Canada, investment group that purchased the facilities in 1999.

Owner, president sued

During a lunch break, a Penobscot County sheriff’s deputy served Great Northern president Lambert Bedard with court papers which stated that he is being sued by four unions in their efforts to protect their severance pay.

The Paper, Allied Industrial, Chemical and Energy Workers International Union, and locals 12, 24, 37 and 152, which represent 500 production employees, filed the lawsuit in Maine Superior Court to get the company to pay severance in accordance with the Maine Severance Pay Act.

The unions asserted, among other things, that “Inexcon and Bedard have individually and by the use of other business entities used the assets of GNP for the benefit of themselves personally and for the benefit of other business entities which they control,” according to court documents.

“At numerous times and in numerous ways, Inexcon and Bedard … commingled the assets of GNP with their own assets and the assets of other business entities to the extent that these defendants and the other business entities may be held liable for the obligations [of] GNP to pay the affected employees severance pay,” the documents stated.

Bedard and Murphy declined to comment on the lawsuit.