Bedard seeks payment for Great Northern landfill

BANGOR – The outgoing owner of Great Northern Paper Inc. said Tuesday he will not relinquish control of a landfill that is the key to completing a $103 million sale of the company without first receiving financial compensation for the waste disposal site.

Brascan Corp. of Toronto, which received approval from a federal bankruptcy judge to purchase Great Northern on Monday, said in court that if it does not acquire the rights to the landfill in East Millinocket, it will withdraw its offer for the mills in Millinocket and East Millinocket.

The impasse must be settled by April 21, a target date by which Brascan is court-ordered to wrap up a sale of the mills or it loses its rights to buy Great Northern. On that date, a federal bankruptcy judge could be asked to reopen bidding for the mills or he could foreclose on the properties.

In a telephone interview from his home in Quebec, outgoing owner Lambert Bedard said he believes the landfill and other properties were properly transferred to him and Inexcon Maine, the parent company of Great Northern, almost two years ago by GNP’s board of directors. The properties were used as collateral to secure more than $3 million in loans under his name and in the name of Inexcon Maine from Katahdin Federal Credit Union in Millinocket, he said.

The money was spent by Great Northern, Bedard said, and the balances on the loans are outstanding.

Katahdin Federal Credit Union has begun foreclosure proceedings in Maine Superior Court in Bangor.

According to court documents, the landfill alone had a value of $3 million when it was transferred to Bedard and Inexcon Maine almost two years ago.

According to attorneys for Great Northern who are trying to sell the mills, the property transfers were handled in a fraudulent manner and they want the properties returned. The attorneys for Great Northern and Inexcon Maine on Tuesday began discussions to set up trial dates in federal bankruptcy court in Bangor unless a settlement is reached beforehand. A tentative trial date is April 14.

Bedard said Great Northern’s attorneys don’t want to give him a dime for the properties even though he owes millions in loans.

“What they’re basically asking for is a gift of $3 million,” Bedard said. “And I’m not going to give a gift of $3 million.”

Bedard said that he should be paid at least enough to cover the balance of the credit union loans, attorneys’ fees and possibly other amounts depending on the commercial valuations of the land if they were to be sold to someone else.

For about three months, Bedard said, he has been approached to “hand over” the land. And, he said, he has tried to resolve the issue, but Great Northern’s attorneys have not presented him with a deal. He denied that he’s keeping control of the properties to delay a sale of the mills.

“I’m still waiting for a proposal,” Bedard said. “All I’ve heard from Mintz Levin [the Boston law firm representing Great Northern] is ‘give it back, give it back, give it back.’ And my response has been ‘no, no, no.’ I’m not holding up anything because I’ve always been willing to talk.”

Bedard said negotiations were taking place Tuesday to try to settle the land transfer, but he would not elaborate on what was being discussed. He said that at some point, the negotiations might have to include Brascan, and did not dismiss the idea of selling the landfill to the Canadian company in a separate transaction outside of the bankruptcy proceedings.

“Everything is open for discussion that makes sense,” Bedard said.

In federal bankruptcy court Tuesday, Judge Louis H. Kornreich tried to balance the urgency of resolving the land transfer complaints filed by Great Northern against Bedard and Inexcon Maine with their right to a fair trial. He said he would not compromise rights to a fair trial to close a sale.

Kornreich told attorneys to notify him today whether they could be ready for a trial on the land transfer issue only by April 14, while reserving the right to litigate claims of alleged fraudulent behavior and mismanagement on the part of Bedard and possibly others at a later date. A trial on the land transfer could result in a monetary value placed on the properties, the judge said.

“I am working with what I think to be reasonable,” said Kornreich, adding, “Surely it would be very nice for everyone to work it out.”

Besides the land-transfer lawsuit by Great Northern’s attorneys and the foreclosure proceedings by the credit union, the Maine Department of Environmental Protection recently sent Inexcon Maine a “notice of violation.” DEP contends that if Inexcon Maine has been the owner of the landfill since June 2001, the landfill now is considered to be an “illegal solid waste disposal facility.”

DEP, in its letter, stated that “the ownership transfer occurred without first obtaining required approvals from the state.”

“Maine law prohibits the Dolby landfill from being owned, controlled or operated by any entity other than GNP, for the purpose of taking GNP solid waste,” the DEP letter stated. Inexcon Maine, which is not in bankruptcy, could be fined up to $10,000 for each day of violation, according to the letter.

Inexcon Maine attorney Nicholas Walsh countered that the company owns the landfill, but before bankruptcy and a shutdown of mill operations, Great Northern was operating and using it. He said the violation is a “technical one” and not a substantial one, and he was working to remedy the situation.