BANGOR – Paychecks are on the way to employees at Red Shield Environmental LLC and RSE Pulp & Chemical LLC who have been waiting more than two weeks to be paid.

U.S. Bankruptcy Judge Louis H. Kornreich decided at a hearing Monday in Bangor to allow the companies to take an advance on money borrowed from Chittenden Bank despite the fact that Red Shield and RSE Pulp have filed Chapter 11.

Chapter 11 of the Bankruptcy Code is designed to provide companies with the time and opportunity to reorganize, including by restructuring their debts or by obtaining new investment capital, according to a press release issued last weekend by the companies’ chief executive officer, Edward Paslawski, and Red Shield’s attorney, Robert Keach of Portland.

The loan advance also allows the companies to pay approximately $124,000 in health insurance premiums to Anthem Blue Cross-Blue Shield.

The first paychecks are for the pay period ending June 15 and total about $226,000 for the approximately 190 people employed at the mill. By the pay period ending June 29, that number had been reduced to 28 people on-site to keep the facility secure and assets from depreciating in value. The payroll for that time period is roughly $76,000.

Without the loan, employees wouldn’t have been paid, and their health insurance would have expired Monday.

Paslawski testified Monday that without paying employees, it was unlikely that they would continue to come to work and probably would find other employment. Without the employees maintaining the facility, the mill would deteriorate in value, and there would be a possible danger to public safety if chemicals and fuel weren’t monitored around the clock.

“It breaks my heart,” Paslawski said Monday when asked how it made him feel to be unable to pay employees.

“I worked my way through college in a paper mill. I know how hard it is to work in a mill,” he said. “We never meant for this to happen. I’m elated that we can pay them.”

Red Shield, composed of a group of private investors, purchased the former Georgia-Pacific Corp. mill in 2006 when G-P announced it was closing the facility. They brought in RSE Pulp to operate the mill.

Red Shield’s assets are between $50 million and $100 million, while RSE Pulp’s are listed in bankruptcy documents as being between $1 million and $10 million. The companies’ liabilities are recorded as $1 million to $10 million, and $10 million to $50 million, respectively.

In spite of the current shutdown, both companies intend to move forward with their plans to produce pulp and, in a partnership with the University of Maine and American Process Inc., build a biorefinery pilot plant to generate ethanol and other salable products from the pulping process.

Paslawski noted that although the companies have filed bankruptcy and owe more than $5.6 million in unsecured claims, he’s still intent on reaching a deal with alternative financing sources to ensure that the mill doesn’t have to close its doors for good.

“Now that this is over, I can get back to it,” Paslawski said. “We’ve been negotiating with several groups to come in and take over the lending … and also provide investing for the company.”

Paslawski expects to have selected a company sometime this week and said he hopes to be back in court as early as next Monday in order to continue with proceedings to get the mill back up by the end of next week.

adolloff@bangordailynews.net

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