JAY — Verso Corp. plans to ask the U.S. Bankruptcy Court in the District of Delaware to determine the taxable value of the Androscoggin Mill and related assets in Jay for tax years 2013 and 2014.
The company also wants the court to determine Verso’s entitlement to related property tax refunds from Jay under the Bankruptcy Code.
Verso Androscoggin’s tax appeal and abatement for the 2013 tax year is scheduled to be heard on May 9 and 10 by the Maine Board of Property Tax Review in Augusta.
The town of Jay intends to contest Verso’s motion to have the cases heard in the Bankruptcy Court.
Verso and 26 subsidiaries voluntarily filed petitions on Jan. 26 with the court to reorganize under Chapter 11. Verso intends to file a Chapter 11 plan of reorganization in the near term and to seek to have that plan confirmed by late June, according to a motion to continue the May hearing.
Verso Androscoggin claims Jay substantially overvalued the paper mill and associated property for tax year 2013. It believes it should have been valued at $460 million, before exemptions were factored in.
The town had valued the property at $988 million prior to exemptions for 2013.
Following Verso Androscoggin’s application for a tax abatement two years ago, Jay had a revaluation done on the property and came up with a valuation of $717 million before tax exemptions were applied. Verso had an appraisal done prior to filing the abatement request.
On Jan. 6, 2015, the Jay Board of Assessors reduced the valuation of the mill and associated property by $223.5 million from $815.4 million, which factored in exemptions, to $591.9 million, also considering exemptions, for tax year 2013.
Verso appealed to the Jay Board of Assessment Review, but that board upheld the assessors’ decision. Verso then appealed to the state Board of Property Tax Review.
“Verso believes that the Bankruptcy Court has jurisdiction to hear and determine these matters, and to determine the matters raised in its 2013 and 2014 appeals,” according to Verso’s attorney John Aromando’s motion to the state board.
“Verso further believes that it would be in the best interests of Verso’s plan of reorganization,” according to the motion. “The 2013 and 2014 appeals have important implications for Verso’s proposed Chapter 11 reorganization.”
Verso Androscoggin’s pending appeal for tax year 2014 has not been scheduled to be heard by the state board. The Jay Board of Assessors and Board of Assessment Review denied Verso’s claims last year that the property should be valued at $400 million or less. Jay assessed the mill for that year at $593.78 million.
The town of Jay “reluctantly agreed not to oppose” Verso’s motion to the state board to continue the May hearing as a “pragmatic recognition that scarce resources need to be managed carefully and that preparing for a hearing that may or may not occur, while also contesting the motion in the Bankruptcy Court, will further burden the town already burdened by Verso’s multiple appeals,” the town’s attorney, Gerald Petruccelli, wrote in response to Verso’s motion to the state board.
“In short, the town does not think that postponing the hearing is a good idea,” Petruccelli wrote. “However, should the Bankruptcy Court deny the motion, the decision is likely to be made shortly before or after the time the hearing would otherwise begin.”
Jay officials never consented to the consolidation of the “two separate appeals for 2013 and 2014 because each of them is complicated enough when considered separately,” he wrote.
Verso had previously sought to have both heard at the same time by the state board.
“The town does not consent to any stay of either appeal except for this continuance,” according to Petruccelli’s response.
Jay respectively urges the board, however, in granting any continuance of the May hearing, to recognize that the town has a substantial interest in the early resolution of the 2013 appeal, he wrote.
“The uncertainty hanging over the town’s financial planning is a significant problem for the town,” Petruccelli wrote. “Accordingly, if the Bankruptcy Court should deny Verso’s motion, as it should, leaving these state tax law matters to determination by state officials, Jay urges the board to schedule a hearing on the 2013 appeal at the earliest time after the Bankruptcy Court’s decision has become known.”
Verso plans to file its motion with the Bankruptcy Court on or before March 31. Upon filing its motion, Verso expects the Bankruptcy Court to schedule a preliminary hearing on that motion in April. At that hearing, Verso intends to request that the court schedule an evidentiary hearing concerning the matters raised by the motion, according to Aromando’s document filed with the state.
Verso believes that it is neither efficient nor economical to engage in further proceedings before the Maine Board of Property Tax Review while matters are pending in the Bankruptcy Court and therefore requests the board to continue the hearing on the 2013 appeal and stay further proceedings before the board pending resolution of the motion to be filed in the Bankruptcy Court.
Verso Androscoggin filed a third tax abatement request with Jay in February for the tax year 2015. It is pending with the Jay Board of Assessors.
Verso claims the valuation of the paper mill, associated property and hydroelectric facilities for that year should be reduced by at least $296.99 million, collectively, and be valued no higher than $340 million for that year.
The town valued the real estate and personal property at about $636.99 million as of April 1, 2015, according to the application.
dperry@sunmediagroup.net
Send questions/comments to the editors.
