BANGOR – Red Shield Environmental in Old Town received permission Tuesday to continue operating in idle mode in anticipation of the mill’s potential startup next month.

U.S. Bankruptcy Judge Louis H. Kornreich approved a motion that will allow the company access to $300,000 cash collateral from a Pine Tree Zone rebate to continue to keep the facility warm so startup can occur quickly if a pending $13.6 million financing agreement is approved next month.

The cash on hand also will be used to continue to pay employees and their health care benefits until a permanent financing decision is reached, but permission was needed because a previous court decision prevented Red Shield from spending any money without permission.

“What this is, is another step forward,” Ed Paslawski, Red Shield chairman and chief executive officer, said after Tuesday’s hearing. “We expect within two to three weeks we can say we’re open and operating.”

Red Shield attorney Robert Keach of Portland said after Tuesday’s hearing that he’s fairly confident that the proposed $13.6 million financing agreement proposed by Woodside Capital Partners of Massachusetts will be approved by Kornreich.

A hearing on that agreement is set for Aug. 20 in Bangor.

Red Shield Environmental LLC and associated company RSE Pulp & Chemical LLC filed Chapter 11 last month and laid off about 160 employees.

Of those 160, some have found other jobs, but Paslawski said most are waiting to return to work at the mill.

At the time of the shutdown, company officials blamed recent and significant spikes in material and fuel costs for Red Shield’s financial troubles. Court documents filed Friday show that liens totaling more than $10 million have been filed against the companies.

Phone calls made Monday and Tuesday to Woodside weren’t returned, but the company’s Web site states that it focuses on “investing in middle market companies that can benefit from strategic re-direction, operational enhancements or balance sheet realignments.”

Paslawski said although he has known company officials at Woodside for quite a while, they have no previous connection to Red Shield.

The site notes that Woodside has experience in developing creative deal structures to assist stakeholders in challenging situations.

“They’re comfortable in this kind of transaction,” Keach said.

Agreements with utility providers, such as Bangor Hydro-Electric Co. and the city of Old Town, to which Red Shield owes money also were reached in a more routine part of Tuesday’s hearing.

“We’re a lot further along than we were last week,” Paslawski said.

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