Bedard testifies, defends $37,154 bill for services

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BANGOR – Almost one year after shutting down Great Northern Paper Inc.’s two mills, former owner Lambert Bedard defended his management style Friday, saying his expertise is worth $1,515 a day plus expenses.

Bedard, who is being sued for millions of dollars for alleged mismanagement of Great Northern, was in U.S. Bankruptcy Court Friday to speak in support of his $37,154 bill for administrative services he said he undertook between last Jan. 9 and Feb. 5, excluding some weekend days.

U.S. Bankruptcy Judge Louis H. Kornreich is reviewing Bedard’s invoice.

Great Northern filed for bankruptcy on Jan. 9, and, in a deal reached with Gov. John Baldacci, company creditors and others, Bedard agreed to step down as manager on Feb. 5. The mills in Millinocket and East Millinocket were sold to Brascan Corp. of Toronto at the end of April, and now are operated under the name Katahdin Paper Co.

What was at issue during a Friday bankruptcy hearing was whether Bedard’s services were that of a management insider or a consultant, a question that could determine if and when Bedard gets paid.

But of greater concern to some of the attorneys who objected to Bedard’s invoice was whether the former owner actually performed any of the work he said he did and in the amount of time he listed on his invoice.

Friday’s hearing ended without a conclusion on whether Bedard should be paid. But it gave Bedard a forum, albeit under oath, to publicly express what he had hoped would have happened to the mills after he shut them down on Dec. 22 in what was intended to be a temporary two-week work stoppage.

Testimony is scheduled to resume at 1 p.m. Wednesday.

From a witness box in U.S. Bankruptcy Court, Bedard told an audience of attorneys and three witnesses waiting their turn to refute him that actions he took as owner were performed to improve the financial well-being of the mills. One of the on-deck witnesses was Jim Giffune, who replaced Bedard as manager and now is scheduled to counter Bedard on Wednesday.

Absent from the courtroom to hear Bedard’s long-awaited comments were any of his 1,130 former employees, most of them unaware that Bedard was back in the state from his Quebec home to defend his invoice.

At least six times Friday, Bedard said he sincerely wanted to restart the machines at the earliest possible date after the two-week shutdown. He said he attempted to secure loans to pay for the machines’ operation, tried to keep customers interested in Great Northern, and worked to maintain levels of supplies so that at any given moment he could “flip the switch and be back in business.”

“All along that was my objective,” said Bedard, who at times appeared flushed and occasionally rubbed his eyes. “Our objective was to resume operations ASAP [as soon as possible].”

Bedard, who purchased Great Northern in 1999 with fellow Canadian Joseph Kass, said he personally replaced Great Northern president Eldon Doody in his position after Doody resigned from it last December. In the two months that followed, Bedard said, his calendar was booked with calls to potential buyers of the company, including eventual new owner Brascan, customers and vendors, particularly heating-oil supplier Sprague Energy and oil transporter Montreal, Maine and Atlantic Railway.

“[The company] did need an orchestra leader,” Bedard said. “It did need a captain of a ship.”

In January, after the bankruptcy filing, Bedard said his efforts focused on protecting the machinery by managing a skeleton crew of about 80 workers whose responsibility was to ensure that the equipment was heated or maintained.

“I was on the mill sites to walk around the facilities to see what needed to be done, to fix what needed to be fixed … to tell the skeleton crew I noticed this that needed to be fixed,” said Bedard, noting that if there were a leak, he could tell the workers which pipe to repair.

During a break from the hearing, a former employee of Champion International, now International Paper, in Bucksport said he could not believe what Bedard was saying.

“I was in the paper business for more than 20 years, and I know people who can do what he said he was doing for $18 or $20 an hour,” said Joseph Greenier, who along with his wife, Michelle, have attended recent Great Northern bankruptcy hearings.

The Greeniers, who have no financial interest in the case, have filed documents in the bankruptcy proceeding stating that they don’t think the sale of Great Northern was handled in a way that follows “Maine’s core values,” as outlined in a state Department of Education handbook titled, “Taking Responsibility: Ethical and Responsible Behavior in Maine Schools and Communities.”

Under questioning by his attorney, Nicholas Walsh of Portland, Bedard said he was not in a position to determine whether his efforts actually added any financial value to the mills or their eventual selling price, $103 million.

“Did I have some success or not? I do not know because I walked away from the mills in early February,” Bedard said.

But what if he wasn’t there to manage the mills? Walsh asked.

“The effect would have been that things would have been left in the air, with a big ship, no, two big ships with no captain willing to steer,” Bedard answered.

Because of time constraints, Bedard was not cross-examined by Portland attorney Daniel Amory, who represents the trustee of Great Northern’s estate, or U.S. Assistant Trustee Robert Checkoway. That is expected to occur Wednesday.

Instead, Amory used whatever time was left to instead question John McVeigh, a Portland attorney who represented BCC Equipment Leasing Corp. of Long Beach, Calif., which is Great Northern’s primary creditor.

McVeigh said BCC, which had liens on all of Great Northern’s equipment, stepped in for Bedard on Jan. 9 to ensure that the mills were protected from deterioration. McVeigh acknowledged that he never walked through the mills after Jan. 9, and had limited contact with Bedard. But, he said, other BCC attorneys attempted to “communicate with Mr. Bedard, and I don’t know if that communication was successful or not.”

After Jan. 9, McVeigh said, Great Northern “appeared to me to be run by BCC with very little contact with mill management. There was no confidence in management.”

Both the Great Northern trustee and BCC are suing Bedard for alleged mismanagement in U.S. District Court. Bedard’s answer to the two lawsuits is due in mid-January.