GNP trustee sues 16 firms ‘Preference’ money sought

BANGOR – Sixteen businesses that were paid a total of more than $838,000 by former Great Northern Paper Inc. in the 90 days before the paper company’s bankruptcy filing are being sued to get the money back.

The trustee of Great Northern’s bankrupt estate, Bangor attorney Gary Growe, filed 16 separate lawsuits Friday afternoon stating in each one that he believes the 16 companies received special treatment in how they were paid by the paper company.

In September, Growe filed lawsuits against 14 other companies, claiming they were preferentially paid more than $2.48 million in the 90 days prior to Great Northern’s bankruptcy filing of Jan. 9. Thirteen of those companies will defend their receipt of the payments at a hearing Tuesday in U.S. Bankruptcy Court in Bangor.

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

In the “preference payment” process, companies first receive a letter from the trustee that states he believes they were paid preferentially. The letter includes a request that the money be sent back. Companies can defend the payments, and if no settlement is reached, the trustee can choose to sue them.

At least 100 “preference payment” letters were sent out to creditors beginning in July, and so far an undetermined number of creditors have sent back more than $100,000 to the trustee, according to a statement Growe made during a recent court hearing.

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.

The intended purpose behind the preference payment recall is to collect the money, put it in a pool, and distribute it in an equitable way to other creditors with claims against the company. Secured creditors are paid first. BCC Equipment Leasing of Long Beach, Calif., which was Great Northern’s primary secured creditor, still is owed more than $10 million by the company.

One of the 16 companies sued Friday is based in Maine, and another has an office in Maine. Goodman Wiping Cloth Co. Inc. of Auburn is being sued for $14,290, while NES Rentals, with an office in Oakland, is being sued for $52,182.

The “preference payment” amounts listed in Friday’s lawsuits range from $5,201, being sought from Chicago Tag and Label Inc. of Libertyville, Ill., to $337,560, being sought from Horizon Paper Co. Inc. of Stamford, Conn.

Other companies being sued by the trustee include: Bristol Paper Recycling LLC, Chappaqua, N.Y.; Adhesives Research Inc., Glen Rock, Pa.; Arch Wireless, Westborough, Mass.; AAA Recycling and Compaction Equipment Inc., New Bedford, Mass.; the Peltz Group Inc., Milwaukee, Wis.; North Shore Recycle Fibers, Salem, Mass.; Port Elizabeth Terminal and Warehouse Corp., Newark, N.J.; American Independent Paper Mills Supply Co. Inc., Tarrytown, N.Y.; Pearson Education Inc., Upper Saddle River, N.J.; Pequot Papers LLC, Southport, Conn.; Bradner Smith and Co., Elk Grove Village, Ill.; and Unisource Worldwide Inc., Brooklyn Park, Minn.