BANGOR – Bankrupt Great Northern Paper Inc. is fighting an attempt by its primary creditor to take possession of its two mills, stating in court documents that the properties are worth at least three times more than the $50 million the creditor is owed.

In court documents filed Thursday afternoon, Great Northern also defended itself against allegations of mismanagement at the mills before and after it filed for Chapter 11 bankruptcy protection on Jan. 9.

“[They] are entirely inaccurate,” Great Northern stated in its court filing.

BCC Equipment Leasing Corp., a subsidiary of Boeing Co., is asking a federal bankruptcy judge to give it the mills, the paper machines and numerous pieces of equipment if a plan to prepare the facilities for sale does not materialize by a scheduled court hearing on Tuesday morning. BCC is a participant in creating a timetable for the sale of GNP and has said that if a plan were worked out, the request to collect its collateral would become moot.

On Thursday, Great Northern questioned why BCC Equipment was making its request to collect the collateral if the lender’s primary objective lately had been to help develop a financing plan to keep the mills heated while a buyer is sought.

“Great Northern shares the apparent position of [BCC] that the assets … are vital for the successful reorganization of Great Northern,” according to the paper company’s court filing. “The motion by [BCC], therefore, is flatly inconsistent with its professed desire to return the mills to operation.”

BCC Equipment is owed more than $50 million on machinery it purchased from Great Northern in March 2002, and then turned around and immediately leased back to the paper company under a six-year, $513,000-a-month payment arrangement. BCC claims it has first priority collateral rights to the properties if it is proven that Great Northern is being mismanaged and not complying with court orders.

Using information from earlier last year, when BCC Equipment and Great Northern signed the lease agreement, the paper company stated in its court filing that BCC obtained appraisals on the leased equipment and the newly converted No. 11 paper machine which totaled $150 million. The paper machine is not part of the lease deal but is included in the collateral.

“In these circumstances, [BCC] would appear to be adequately protected with respect to its asserted $50 million claim,” according to Great Northern’s court filing.

BCC’s allegations of mismanagement include that the paper company did not honor union contracts as they pertained to the collection of health care premiums from the workers and did not pay court-ordered bills such as electricity and payroll on time.

Since Jan. 9, Great Northern has received up to $5 million in emergency loans from BCC Equipment and Congress Financial Corp. to pay for “bare necessities” at its two mills in Millinocket and East Millinocket. That arrangement lasts until next Tuesday. The expenses that were to be paid include heating oil, electricity, wages for a skeleton crew of 80 people, health care benefits of up to $300,000 for all of its 1,130 workers and 677 retirees, and miscellaneous costs.

On Thursday, Great Northern gave the bankruptcy judge copies of e-mails circulated among attorneys for the paper company and its lenders that alleged that bills were late in being paid because the lenders were slow in lending the money. The e-mails included one dated Jan. 22 from Sandy Perkins, chief financial officer of Great Northern, in which he stated that without the money, he would not be able to pay for heating oil or payroll later that day.

“We really need to get this funded as early as possible today,” wrote Perkins, at 10:43 a.m. on Jan. 22. “Sprague [Energy] will not even load the oil cars until they receive wire confirmation, and we need the eight cars in Millinocket tomorrow. The train leaves Searsport at around 2 p.m. today, and it takes some time to load the cars.

“The payroll file was submitted yesterday with the understanding that funds would be available to cover it today,” Perkins continued. “We are now sitting on two power payments which we cannot make without these funds. Please let me know as soon as this is funded so we can get things moving.”

Within 10 minutes of receiving Perkins’ e-mail, Alex Rodolakis, an attorney for Great Northern, sent an e-mail to attorneys for Congress and BCC in which he asked why the money has been delayed.

“Based on our discussions [Jan. 21] with [BCC] and Congress, we understood that [BCC] and Congress had resolved whatever issues that [were] among each other with respect to the release of funds,” Rodalakis wrote. “Is there any reason why money has not been released to GNP at this point?”

E-mailed responses from Congress and BCC are not included in Great Northern’s court filing.

In a court hearing on Jan. 17, Brascan Electricity Marketing Services told Judge Louis H. Kornreich that it had not received its first payment from Great Northern, an alleged violation of the judge’s order on Jan. 10 to pay the bill.

Numerous attempts in the last two weeks to confirm from Brascan or its attorney whether the payment had been made were unsuccessful.

BCC, in its court filing on Monday, said that Great Northern’s “failure to pay for electricity has increased fears among [BCC] and other interested parties that Great Northern cannot preserve and protect its assets.”

Great Northern said Thursday that the electricity bills had been paid.

“GNP has made all required post-petition payments to Brascan by wire transfer on Jan. 22,” according to the court filing. “Indeed, any delay with respect to the foregoing deposits or payment to Brascan were totally the responsibility of [BCC] and/or Congress Financial Corp. due to their failure to honor GNP’s repeated borrowing requests.”

On Thursday, Great Northern said it was not negligent when it commingled the health care premium contributions of workers and retirees with the company’s general funds prior to a judge’s order not to do so.

In court on Jan. 17, Kornreich ordered that the premiums paid by workers and retirees be segregated into a separate account, and that Great Northern deposit $900,000 for its share of health care premiums into another separate account.

Kornreich ordered that the $900,000 be spent on health services provided between Jan. 9 and Feb. 4, and not bills processed during that time.

Great Northern, in its court filing Thursday, said it deposited the money into separate accounts.

But before filing for bankruptcy, the company said that contrary to BCC’s allegations, it did not break any of its collective bargaining agreements with its 14 unions by not segregating health care premiums from the general account.

“The collective bargaining agreements contain no such provisions with respect to the escrow or segregation of employee benefit contributions,” according to Great Northern’s court filing.

Great Northern said the collateral that BCC wants to claim is “among the most significant assets of this bankruptcy estate.”

“As courts of equity, bankruptcy courts ‘are compelled to disfavor a lease forfeiture that would imperil the debtor’s reorganization and impede rehabilitative goals,'” said Great Northern in its filing, citing a 1988 court decision.

In a separate action on Thursday, BCC Equipment’s attorney, John McVeigh, confirmed that one or more lenders are working out the details to provide Great Northern with $1 million a week to keep the paper company’s warm while a buyer is sought.

McVeigh said BCC would be one of the lenders if details are worked out and presented to court by Tuesday.

“Negotiations are under way to fund enough to keep the mills in warm spaces and perform other tasks,” McVeigh said.

What expenses will be covered with the money each week has not been decided, he said, and talks have included health care coverage of some kind.

“What it’s going to cost is another one of those operational details that needs to be worked out,” McVeigh said.

McVeigh said he could not state when in the next four days that a financial plan would be worked out, but that discussions were ongoing.

“One thing everybody knows is there’s a hearing Tuesday,” he said.