GNP Files for Bankruptcy

Great Northern Paper Co., a key part of the struggling northern Maine economy, filed for bankruptcy protection Jan. 9.

The filing creates additional uncertainty for 1,100 workers, most of whom have been laid off for two weeks while the plant has been shut. The company's two mills are located in Millinocket and East Millinocket, Maine.

Harry Murphy, the lawyer who filed the chapter 11 bankruptcy petition, said the company had lined up $25 million in financing that will allow it to call back all or most of the workers and resume production.

"Everyone believes that there's a compelling social interest here for the workers to come back to work," Murphy said.

Great Northern's only shareholder is Inexcon, a Quebec-based consulting firm that purchased the company in 1999.

The bankruptcy filing caps a tumultuous decade for Great Northern, the two mills and two towns that depend on the mill jobs. The fate of the mills has been in the hands of three owners since 1990 -- Georgia-Pacific, Bowater and Inexcon.

Now it's up to U.S. Bankruptcy Judge Louis H. Kornreich to decide what's next.

Murphy said the financing deal should allow that to happen.

He said Great Northern owes $50 million to Congress Financial and $16 million to Boeing Equipment, which had provided credit lines that Great Northern exhausted in December. He said the two companies have agreed to loan $25 million to Great Northern to tide it over while a buyer or investor is sought.

One of the effects of the bankruptcy filing is that a buyer could be allowed to negate contracts with workers as part of the purchase.

In the bankruptcy filing, Great Northern said there are several conditions on the new financing, including a 60-day reprieve on payment of health insurance benefits for anyone who retired after 1992; elimination of 401k contributions; and an exemption from having to pay severance to some workers who may have to be laid off.

The company said its 20 largest unsecured creditors are owed about $17 million.

In addition, the company owes $36 million to the Nature Conservancy, which agreed to finance that much debt as part of a deal that transferred 41,000 acres of woodland to the conservation group and put another 240,000 acres under a conservation easement, protecting public access.