October 18, 2024
Archive

Bankruptcy judge holds key to fate of GNP

BANGOR – The sole player responsible for the fate of Great Northern Paper Inc. will enter a courtroom today wearing a black robe and carrying the only key to the paper mills’ continued operations: a flimsy book filled with bankruptcy laws.

That paperback will be the guide for U.S. Bankruptcy Judge Louis H. Kornreich in determining whether he will reopen bidding for the mills after the window for bids was closed nearly a week ago.

It also could provide the basis for whether he will change Great Northern’s bankruptcy status, turn the mills over to the company’s primary creditor to pick up its collateral, and proceed with a liquidation sale of what’s left.

Around-the-clock negotiations among lawyers, potential buyers and creditors occurred over the weekend.

Participants contacted Sunday evening said a range of possibilities is in store at today’s court proceedings.

The judge’s seat is a difficult chair to be filling, attorneys in this case have said. There is powerful economic, cultural and emotional impact the multimillion-dollar bankruptcy is having on Maine: The loss of 1,130 mill jobs could cost another 5,000 positions and $115 million in wages at other businesses, according to state Department of Labor statistics.

“Nothing’s ever easy, is it?” the judge said Friday during court proceedings which, at that time, were supposed to result in a sale of the mills by the end of the day.

Not even the Governor’s Office could have a say in the court proceedings.

On Friday, Kurt Adams, an attorney for Gov. John Baldacci, tried to tell Kornreich how much the governor believes reopening the bidding could benefit Great Northern’s estate. Over the past three months, Baldacci has exerted pressure on creditors, labor unions and potential buyers to work out a deal and get the mills open quickly, and most of those talks have taken place at the governor’s office in Augusta.

Robert Keach, an attorney for bidder Belgravia Paper Co. of Vancouver, British Columbia, objected to Adams being allowed to offer remarks, stating that Baldacci does not have a personal financial interest in the bankruptcy, such as personally being owed money by Great Northern.

“It’s inappropriate and introduces a political interest that is not an [element] in this process,” Keach said.

Kornreich agreed, although he noted that he was curious as to what Baldacci would have to say. The judge said he had to stick to the law and not be swayed by outside interests trying “to influence this process in any way.”

“I will not permit the governor to be heard … and I regret that,” Kornreich said.

Afterward, Adams said he respected Kornreich’s decision, noting that the judge is trying to run his courtroom “beyond reproach.”

That’s what other lawyers are observing, too. During interviews over the last few weeks, attorneys have said that Kornreich is a tough judge who is adamant about maintaining control of his courtroom. He does not like to waste time with run-around presentations. And, they said, if he needs to, he’ll take evidence from witnesses before he’ll render a decision.

And that’s what Kornreich is doing today. Among the numerous decisions Kornreich has to make, at least three carry considerable weight in the overall future vitality of the mills in Millinocket and East Millinocket. He wants witness statements and not attorney arguments to help him with his rulings:

. The first, whether the $91 million offer by Belgravia – the only one received so far – is adequate and in compliance with bidding rules for an auction of the mills that he approved a month ago.

The bid is filled with a long list of conditions that include the successful negotiation of labor, supplier and customer contracts that objectors said Belgravia had to satisfy by last Friday. That was the day Kornreich was scheduled to select a buyer.

Belgravia disagreed on whether Friday was a drop-dead date for contract negotiations to be made final, saying that the conditions had to be met instead by April 21, when the new buyer is supposed to take ownership of the mills.

If Belgravia’s offer is tossed out, Kornreich may approve an auction for the mills and any interested buyer could bid.

. The second decision, whether Brascan Corp. of Toronto, which believes Belgravia did not follow the bidding rules, can submit an offer even though it missed the deadline for bids. On Friday, Brascan presented two offers to Great Northern’s attorneys, which were read in court, even though Kornreich had not ruled that he would give the bid any consideration.

And over the weekend, that bid apparently changed more times and probably will continue to evolve before the court reconvenes at 9 a.m. today, according to negotiators.

“Everybody’s talking to everybody else,” said Jim Giffune, chief executive officer of Great Northern, on Sunday afternoon. “How that’s going to turn out, I don’t know.”

Alex Terras, a Chicago lawyer for Boeing Capital Corp., which is owed more than $75 million by Great Northern, said Sunday that “the parties have spent the weekend in negotiations that have resulted in little, if anything – certainly not in a universal agreement.”

“I am continuing to assume that the sale will be approved today, not whether it will be approved, but to whom,” he said.

On Friday, Terras said that if a sale of the mills were not completed by Monday afternoon, Boeing would stop lending money to Great Northern to keep its facilities heated until a new owner takes over on April 21. The result of that would be foreclosure, and most of the property and machinery would be turned over to Boeing.

. The third decision that Kornreich has to make today is to pick a company to be the actual buyer. That could be Belgravia if its offer stands and the bidding is not reopened or between Belgravia and Brascan if Brascan’s offer is allowed into the proceedings. Or Kornreich also could disallow Belgravia’s offer and open an auction. Then, any interested buyer, even ones not identified in court Friday, could bid.

And if nothing works out, the alternative is a liquidation sale.

On Sunday afternoon, Giffune said it was doubtful a liquidation sale would occur but that a buyer would be chosen today. “At this point, I really am encouraged, but guardedly so,” he said.


Have feedback? Want to know more? Send us ideas for follow-up stories.

comments for this post are closed

You may also like