EAST MILLINOCKET — Great Northern Paper Co.’s Chapter 7 bankruptcy filing on Tuesday is expected to delay an auction of the company’s mill next month, but it probably won’t hurt the town’s chances of collecting delinquent taxes owed by GNP, officials said.
Attorney Hans Peterson of Rudman Winchell of Bangor, the firm handling the auction for Northern Construction Services, said Wednesday that state law would likely grant East Millinocket secured creditor status as a municipality owed taxes despite the Board of Selectmen not voting on Monday to file liens for GNP’s overdue $657,900 in personal property and real estate taxes.
“What I would want to know is this: Did they (selectmen) simply not file a notice of lien or have they affirmatively said we are not claiming a lien? It would be one thing to say, ‘We are not really going to press our lien right now,’” Peterson said Wednesday. “It would be another thing altogether to say that ‘We are affirmatively releasing our lien, and we are not going to claim it.’”
“If they haven’t waived it or formally released it, then under the law, it is probably still in effect,” Peterson added.
East Millinocket town attorney Dean Beaupain said Wednesday the town has not released GNP from its debt and still plans to collect it.
Under bankruptcy law, the auction is automatically halted until a bankruptcy court judge can appoint a trustee to protect creditors’ interests, Peterson said.
Selectmen met Monday in response to Rudman Winchell attorney Curtis Kimball’s confirmation on Sept. 17 of Northern Construction’s plans to auction the paper mill real estate and buildings on Oct. 15.
Maine Superior Court Justice Ann Murray ruled on May 20 that Northern Construction could sell the real estate encumbered by Northern Construction’s mechanic’s lien, which was filed in February, in 90 days.
Northern Construction was among the first to file what in April totaled more than $6 million in liens against several GNP corporate entities. Under state law, typical creditors, such as businesses, must file liens 90 days prior to the filing of bankruptcy to achieve claims secured by law, Peterson said.
GNP filed for bankruptcy on Tuesday, listing more than 1,000 creditors and at least $50 million in debt. That filing might have been spurred by advance word of a petition filed Tuesday by three creditors in federal bankruptcy court in Bangor to force the company into involuntary bankruptcy.
Messages left with GNP spokeswoman Alexandra Ritchie Tuesday and Wednesday seeking comment were not returned.
On Wednesday, the United Steelworkers Union, which represents employees at the mill, requested to be added to the list of GNP’s creditors, seeking claims connected to the employees’ labor agreements that extended through 2016.
David Jury, a Pennsylvania-based attorney for the union, said Wednesday that the union is still trying to determine what parts of that agreement might qualify for claims in the bankruptcy case.
Beaupain said that the town has pursued its debts in accordance to timetables required by state law. It served notice earlier this month of its intent to file a real estate lien in 30 days. Under state law, 30 days notice is granted to taxpayers who fail to pay real estate taxes on time, he said.
Of the $657,900, GNP owes $361,845 in real estate taxes for the 2013-14 fiscal year, East Millinocket tax collector Erica Ingalls said. The rest is taxes on the personal property, or equipment, at the mill.
Beaupain agreed with Peterson that the town’s position is likely secured, particularly with GNP’s real estate debt. However, to protect its interests, the town will proceed as if the auction will occur until it gets notice that it won’t, Beaupain said.
The reason officials will proceed as though the auction will occur is GNP Maine Holdings filed for bankruptcy, not GNP East. GNP East is the corporate entity that pays personal property and real estate taxes to the town, Beaupain said.
“As a matter of law,” Beaupain said, “the town’s position is more secure if a personal property tax lien is filed before the auction, but that decision has not been made” by selectmen.
Selectmen will meet on Oct. 9 to weigh whether to file a personal property lien.
Peterson said that secured creditors such as banks, lenders, mortgage holders and those with liens securing their interest in a debtor’s personal property or real estate typically are the first to get paid in bankruptcy proceedings. Next are priority creditors without liens, such as the state and federal government and employees owed wages. Unsecured creditors come last.
Peterson said that without reviewing GNP’s assets and debts, no one could say for certain how many creditors would get paid by the bankruptcy.
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