The fate of Great Northern Paper and its mill in East Millinocket could be sealed Tuesday at a bankruptcy auction in Bangor.
The trustee for the bankrupt paper mill received “multiple quality bids by the bid deadline,” according to Randy Creswell, an attorney at Perkins Thompson working for the bankruptcy trustee.
The bid deadline was 11 a.m. Monday and the auction began at 10 a.m. Tuesday at the Penobscot County Courthouse in Bangor. A federal judge is expected to approve the sale later this afternoon.
Creswell declined to discuss the specific number and amount of the bids, though he did confirm more than one surpassed the minimum opening bid of $2.6 million.
He also said he did not know whether any of the bidders want to operate the mill as a paper-making facility.
“I don’t know the answer to that,” he said. “There are certain aspects of due diligence for being qualified as a bidder, but it would not entail disclosing that type of information as to what they’d want to do with the mill.”
The $2.6 million opening bid was from GNP Acquisition and pertains to the mill and its related equipment and machinery, not the land.
Great Northern’s trustee, Pasquale “Pat” J. Perrino Jr., chose GNP Acquisition in mid-November as a “stalking horse,” a term in bankruptcy auctions for the party that offers an opening bid. Other bidders interested in purchasing Great Northern’s assets would have to bid at least $2.9 million to beat GNP Acquisition’s position. Add the land to the deal, and another party would need to come up with at least $3.25 million, Creswell said.
Perrino on Tuesday morning is expected to choose the “highest and best” offer, according to Creswell, even if that offer comes from an entity that wants to scrap the mill rather than try to make paper in it again. Perrino has said in the past that the ultimate goal would be to get an operator into the mill, but that desire must also be weighed against Perrino’s duty as trustee to return the most money to Great Northern’s creditors, who are owed more than $60 million.
GNP Acquisition represents Capital Recovery Group, a Connecticut-based auction company that is, according to its website, “a recognized leader in the appraisal and disposition of industrial and commercial assets.”
Great Northern Paper, which was managed by New Hampshire-based private equity firm Cate Street Capital, idled the paper machines at its East Millinocket mill in late January and a few weeks later laid off more than 200 employees. The company continued to maintain a skeleton crew at the mill to keep it ready for a potential restart. As recently as July, company officials were voicing confidence that it would restart.
However, on Sept. 22 the company filed for Chapter 7 bankruptcy to liquidate its holdings. A Chapter 11 filing would have indicated an attempt to reorganize and continue doing business.
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