Great Northern estate sues seven companies

BANGOR – Seven national companies, including two in Maine, are being sued by the bankrupt estate of Great Northern Paper Co. in an attempt to recover more than $2 million in what the estate’s trustee calls “preferential” payments to them.

Gary Growe, a Bangor attorney who is trustee of Great Northern’s bankrupt estate, filed the lawsuits in U.S. Bankruptcy Court in Bangor late last week, along with David Sherman, a Portland attorney who represents Growe in his capacity as trustee.

The seven companies are the first to be hit by lawsuits after they were notified in writing in July that Great Northern may have given them preferential treatment over other creditors when their bills were paid in the 90 days before the paper company filed for bankruptcy. The seven companies, along with dozens of others, were asked to return the money or face the possibility of a lawsuit.

Under bankruptcy law, a trustee is allowed to demand the return of payments received by suppliers in the 90 days before a bankruptcy if the trustee believes the suppliers were paid preferentially over others. Also, the trustee is allowed to go after any money received by company “insiders” or top executives in a 12-month period before bankruptcy.

More than $46.6 million was paid out by Great Northern in the 90 days before the Jan. 9 bankruptcy filing, according to financial documents submitted to U.S. Bankruptcy Court in Bangor earlier this year. But not all of the hundreds of businesses nationwide that received payments in those 90 days received letters from Growe demanding that the money be sent back. In August, Growe said the company was seeking at least $4.6 million or 10 percent of what was paid by Great Northern in the three months prior to bankruptcy.

The intended purpose behind the preferential payment recall is to collect the money, put it into a pool, and distribute it in an equitable way to other creditors with claims against the company, according to bankruptcy attorneys. Secured creditors are repaid first, and if anything is left, then unsecured creditors.

In Maine, Lynch Logistics of Bangor, which conducts business as Central Maine Transport, has been sued to send back $472,680, and Chester Forest Products of Lincoln has been sued to send back $230,648, according to the lawsuits.

The other companies are: Avebe America of New Jersey, Weavexx Corp. of North Carolina, Honeywell Measurex Systems of Chicago, Albany Mount Vernon Dryfelt of North Carolina, and Graymont Inc. of New Brunswick, Canada. The total amount that Growe is seeking to be returned is $2.019 million, according to the lawsuits already filed.

“The preferential transfers were made while [Great Northern] was insolvent,” Growe stated in court documents.

Dean Beaupain, a Bangor attorney representing Lynch Logistics, on Monday called the lawsuit “a mistake.” He said Lynch received a letter from the trustee asking that the company send back $10,000, and now the lawsuit is claiming the firm needs to send back almost $473,000.

Beaupain said Lynch still is owed thousands of dollars from Great Northern.

“Our position is we don’t owe them any money,” Beaupain said.

An accountant for Chester Forest Products did not return a telephone call for comment. Sherman said he could not comment on the lawsuits, and referred questions to Growe. Growe did not return a telephone call for comment.

Great Northern’s two mills in Millinocket and East Millinocket were sold to Brascan Corp. of Toronto in April. They are managed by NexFor-Fraser Paper Co. and are operated under the name Katahdin Paper Co. East Millinocket currently is producing paper while plans are under way to restart the Millinocket mill.