Red Shield Environmental LLC and RSE Pulp & Chemical LLC got final approval in U.S. Bankruptcy Court on Wednesday to borrow roughly $1.25 million to help pay laid-off employees, who could be back at work in the next two weeks.

Lawyer Robert Keach of Portland said Red Shield, which filed for Chapter 11 bankruptcy protection after its Old Town pulp manufacturing plant closed down last month, is in “active negotiations” for investment capital with three companies, two of which seem to be more serious financial sources. All three are private equity firms.

Red Shield could be back in court next week, Keach said, and announce a deal that would reopen the facility, which shut down June 6. The companies owe more than $5.6 million in unsecured claims.

Red Shield announced June 28 it had filed for Chapter 11 bankruptcy relief, which is designed to give the companies time to reorganize by restructuring their debt or obtaining new investment capital.

The $1.25 million will be applied to payroll and health insurance, and to pay for some chemical purchases. Red Shield is borrowing the money from Chittenden Bank of Burlington, Vt., which is an affiliate of Maine Bank & Trust.

About 160 Red Shield employees are still out of work. There are 28 workers still in the plant providing security and maintenance, and to keep it running at a base level so that the plant can be restarted when a deal is final. It takes about four days to get the facility up and running.

“[The chemical purchases] keep the mill in idling mode, ready to open on a moment’s notice,” Keach said. “As soon as we receive court approval and the money begins to flow, we can get people back to work and get the plant up and operating.”

Red Shield, which is made up of a group of private investors, bought the former Georgia-Pacific mill in 2006. RSE Pulp operates the facility.

jbloch@bangordailynews.net

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