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OLD TOWN – Financing negotiations weren’t completed Friday in time to save Red Shield Environmental LLC, the pulp manufacturing facility, from having to file bankruptcy.
The company’s attorney, Robert Keach of Portland, said the Chapter 11 petition was filed around 7 p.m. at U.S. Bankruptcy Court in Bangor.
“It’s not that the miracle hasn’t happened, it’s just taken a different form,” Keach said.
Although Keach was confident that a deal to keep the mill open will come through in the near future with a financing party that he couldn’t reveal, no consensus was reached after all-day negotiations Friday, he said.
“Those discussions will continue in Chapter 11 as opposed to outside,” Keach said.
Red Shield employees did not receive paychecks last week and still hadn’t been paid as of Friday morning despite approval Tuesday from Chittenden Bank and the Finance Authority of Maine for a $1.3 million loan. Details of that loan aren’t being released by FAME.
Keach said an emergency hearing is scheduled for 10 a.m. Monday at U.S. Bankruptcy Court in Bangor. Part of that hearing will seek approval for payroll checks to be issued to employees.
When it was announced Wednesday that Red Shield likely would apply for bankruptcy, Keach said it should be looked at only as a regrouping period to address a short-term cash-flow problem.
“It looks favorable, but it’s not done. A lot of people are working very hard on this,” Keach said
Red Shield’s future looked bright just two months ago when the company announced it had received a $30 million grant from the U.S. Department of Energy.
That money, however, won’t help with the cash-flow situation or with replenishing the company’s supply of wood chips. The grant was awarded to RSE Pulp & Chemical LLC, a division of Red Shield Environmental, to continue a partnership with the University of Maine and American Process Inc. of Atlanta, Ga., specifically to build a pilot plant for ethanol production at the mill.
The mill, which a group of private investors purchased in 2006 when Georgia-Pacific Corp. announced it was going to close the facility, has been shut down temporarily since June 6. While about 160 employees were laid off, nearly 30 continue to work at the mill to keep the operation ready for startup whenever officials give the go-ahead.
Recent and significant spikes in material and fuel costs are to blame for the current situation, according to company officials.
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