November 14, 2024
Business

GNP trustee sues 13 suppliers for return payments Four Maine companies included

BANGOR – Four Maine companies are among 13 former Great Northern Paper Inc. suppliers being sued by the trustee for the papermaker’s bankrupt estate because they may have been given special treatment in how their bills were paid.

Bangor attorney Gary Growe, who acts as Great Northern’s trustee, filed 13 separate lawsuits on each of the companies Tuesday afternoon, stating in each one that Great Northern may have paid them preferentially over other creditors. Growe stated that he wants the money returned, a total of $215,366, plus interest and attorneys’ fees.

The 13 companies now are part of a growing list of suppliers who are being sued. Thirty other lawsuits have been filed, and the scuttlebutt around the U.S. Bankruptcy Court is that the number could top 80.

Including the lawsuits filed Tuesday, the trustee seeks the return of $3.5 million in payments. At least 12 of the other 30 lawsuits are proceeding through bankruptcy court, with hearing dates set for March.

Under bankruptcy law, a trustee can demand the return of payments received by suppliers in the 90 days before a company enters bankruptcy protection 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 bankruptcy.

In another lawsuit filed more than a week ago, Growe alleged mismanagement by Great Northern’s owners, Lambert Bedard and Joseph Kass, and its board of directors. In that lawsuit, Growe seeks the return of $200,000 paid to former Chief Financial Officer Timothy Morgan in bonuses paid before the bankruptcy.

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.

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.

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 in bankruptcy court earlier this year.

The Maine companies being sued are Rodgers and Associates, which does business as Rodgers Aero-Tech Inc. of Brunswick; Construction Survey Associates of Norridgewock; Industrial Pump Services LLC of Waterville; and Hill Control Services Inc. of Bangor. Delaware-based Horizon Solutions, formerly known as Holmes Distributors Inc., which has a Portland office, also is being sued.

The other companies are: Northstar Pulp & Paper Inc. of Springfield, Mass.; Lewis C. Howard Inc. of Kalamazoo, Mich.; Coen Co. Inc. of Burlingame, Calif.; Holyoke Machine Co. of Holyoke, Mass.; Helwig Carbon Products Inc. of Milwaukee, Wis.; Hagglunds Drives Inc. of Columbus, Ohio; Grandville Printing Co. of Grandville, Mich.; and R&R Logging, location unknown.


Have feedback? Want to know more? Send us ideas for follow-up stories.

comments for this post are closed

You may also like