The owners of Augusta, Maine's only paper mill, closed for the past two years, have filed for bankruptcy protection to prevent the city from taking it for back taxes and to preserve it for an interested buyer.
The petition by the owners of American Tissue Mills of Maine, which produced tissue from recycled paper was filed Jan. 17 in U.S. Bankruptcy Court in Portland.
Benjamin Marcus, the attorney representing American Tissue Mills of Maine LLC, said that, "The city's tax liens were set to mature on Jan. 18, and in that event the city would have taken tax title to the mill, so this prevents that from happening."
The company is seeking protection under Chapter 11 of the federal bankruptcy code.
More documents will be filed shortly, Marcus said, including a company list of assets and liabilities.
Marcus said American Tissue of Maine — a subsidiary of Hauppauge, N.Y.-based American Tissue — is trying to arrange the sale of the Augusta plant, which last produced tissue paper in August 2000.
"We have a party interested in acquiring the mill and reopening it," he said. "In order for that to happen, it will need to be approved by the court, and the buyer will need to make arrangements with various parties, including the city."
He said American Mills of Maine remains in control of the property, and that no court hearings are scheduled yet because the plant is not functioning.
The largest creditor is an entity called Augusta Tissue LLC, Marcus said. "If (the mill) were an operating company, it would need to deal with a number of things," said Marcus.
Marcus said the assets include the mill, the real estate, the equipment — including two paper machines — and a landfill on 170 acres along Church Hill Road. The land includes a storm water and leachate retention pond and has been used as a sludge dump for byproducts of the paper-making process.
Augusta Mayor William Dowling said the city has been approached by a party interested in taking over the mill. "It's an extended member of the same family that owns American Tissue," Dowling said Monday. He said the bankruptcy filing is one method of getting a clear title to the mill.
American Tissue Mills of Maine owes the city more than $350,000 in property and equipment taxes, interest and fees. The foreclosure action involved taxes for the 2001 fiscal year, some $85,000 of the total.
When American Tissue bought the Augusta mill, it had to pay $365,000 to the city in overdue real-estate and personal-property (equipment) taxes from 1998, 1999 and 2000 to settle debts from the previous owners, Tree-Free Fiber Inc.
Dowling said he wants to protect the city's interest in the Augusta properties, so he has asked the city's attorney, Stephen E. F. Langsdorf, to follow the proceedings in bankruptcy court. "Frankly I'm very insistent that the city be made whole," said Dowling, "and they're aware of that."
He said the filing in bankruptcy court gains time.
For many years, the Augusta plant operated as Statler Tissue. Central Maine Daily Sentinel