BANGOR – Lambert Bedard and Inexcon Maine, former owners of bankrupt Great Northern Paper Inc., are responsible for paying back more than $3 million in loans to Katahdin Federal Credit Union in Millinocket, a Superior Court judge has ruled.

But actual collection of the money still is a long way off, if it happens at all.

Penobscot County Superior Court Justice Jeffrey L. Hjelm ruled last week that Bedard and Inexcon Maine defaulted on three loans from Katahdin Federal, and ordered that the outstanding balances on the loans, plus interest, late fees and attorneys’ fees, be paid.

The amount due could top $3.2 million.

Hjelm’s ruling will not be final until the end of August, assuming Bedard and Inexcon Maine do not appeal it. Barring an appeal, Katahdin Federal then will decide whether to undertake collection action against Bedard and Inexcon Maine and possibly begin to inventory their assets, Daniel Cummings, a Portland attorney representing the credit union, said Tuesday.

“We don’t know yet,” he said. “We’re in the stage of analyzing it. We’re not entitled to collect yet anyway.”

Bedard and Inexcon Maine do not contest taking out the loans but they believe they should not be the ones repaying the money, said their Portland attorney, Nicholas Walsh, on Tuesday.

Instead, the loans should be repaid from proceeds of the sale of Great Northern because Bedard and Inexcon Maine gave the loan money to Great Northern to fund its financially strapped operations, he said.

Great Northern filed for bankruptcy on Jan. 9, and was sold to Brascan Corp. of Toronto in late April. Bedard, who was president of Great Northern and co-owner of parent Inexcon Maine, stepped aside as head of the paper company in early February.

The loans were secured with Great Northern property transferred from the company to Bedard and Inexcon Maine after an affirmative vote by Great Northern’s board of directors in June 2001.

The property transfer was not noticed until attorneys for Great Northern’s bankrupt estate came across it last March when trying to sell Great Northern’s two mills in Millinocket and East Millinocket. The attorneys asked U.S. Bankruptcy Judge Louis H. Kornreich to order that the properties be returned to Great Northern so that the mills could be sold.

Katahdin Federal, however, objected to the attorneys’ request, stating in court documents that it should be paid the $3 million balance on the loans first because the properties were put up as collateral.

Kornreich, however, ordered the transfer of the properties last April. But he also ordered that $3.6 million be placed into an escrow account so Katahdin Federal can argue in bankruptcy court why it is entitled to $3.2 million of that amount. A trial has been scheduled to begin March 1, 2004.

Boeing Capital Corp. of Long Beach, Calif., which was Great Northern’s primary secured lender, is fighting the credit union’s payment pursuit, stating in court documents that Katahdin Federal participated with Bedard and Inexcon Maine in a “wrongful scheme” that eventually adversely affected Great Northern’s creditors. Boeing stated that as primary secured creditor, it should be paid in full first from the sale proceeds.

Boeing also stated in the documents that, at the most, the properties used as collateral were worth $755,000 and not $3.2 million.

Three other creditors also are seeking payment from the escrow account, and Boeing filed a lawsuit against them Monday in bankruptcy court.

Boeing’s attorneys could not comment Tuesday on Hjelm’s ruling because they hadn’t seen it. But Walsh, Bedard and Inexcon Maine’s attorney said he believed it would bolster Katahdin’s argument in bankruptcy court that it is entitled to the money.

“They needed a [court] judgment, and they got it,” Walsh said.

He said he believes Katahdin will be paid in full from the $3.6 million escrow account.

“It’s ample money to satisfy the judgement, and we hope that happens soon,” Walsh said. “That’s what we anticipate is going to happen.”

Even though Bedard and Inexcon Maine did not dispute taking out the loans, they did try to postpone the Superior Court ruling, telling Hjelm in court documents that he should wait until after the bankruptcy court case was completed before making a decision.

“Should judgement [be] issued now against Inexcon Maine and Lambert Bedard, both parties’ credit will undoubtedly be compromised further,” Walsh wrote in court documents. “Execution on assets will be attempted and may occur. These consequences will be entirely unnecessary and will cause unwarranted harm if, as is probable, KFCU is paid from the escrowed accounts.”

Hjelm said the impact of his decision on Inexcon Maine and Bedard’s creditworthiness was “not a basis for delay.”

“If, as the defendants argue, their credit will be affected adversely because judgments are entered against them in this case, then that would be a direct result of the fact that the plaintiff has proven them liable on the promissory notes.”