Judge questions NewPage's case for creditor protection
HALIFAX - A Nova Scotia judge admonished NewPage Port Hawkesbury Corp.on Friday for not providing sufficient financial information as itseeks protection from its creditors.
HALIFAX - A Nova Scotia judge admonished NewPage Port Hawkesbury Corp. on Friday for not providing sufficient financial information as it seeks protection from its creditors.
“I've never seen such a dearth of financial information before,” said Judge David MacAdam of the province's Supreme Court in Halifax.
MacAdam also asked whether NewPage's paper plant in Cape Breton - which is set to close this month - is bearing the brunt of its Ohio-based parent company's financial difficulties.
“Is Port Hawkesbury wearing this disproportionate to other companies?” MacAdam said.
The mill in Point Tupper wants the court to approve a settlement and transition agreement with its parent company, which is also seeking protection from creditors in the United States in a federal bankruptcy court in Delaware. MacAdam said a decision in Delaware could influence the proceedings in Nova Scotia.
Under the settlement and transition agreement, the parent company would give the mill US$25 million to help it complete remaining work and maintain equipment during a phased-in shutdown scheduled to begin Saturday. The money would also help fund legal proceedings and assist with the search for a buyer.
Lawyers representing about a dozen creditors filled the court Friday, along with pensioners and union members.
A lawyer for NewPage argued the company needs approval of the settlement and transition agreement so it could quickly move ahead with a sale.
“The approval of relief today will hopefully lay the groundwork for a successful sale ahead,” John Stringer told the court. “The company believes an expedited sales process is vital.”
Stringer argued the company has met the criteria for creditor protection by showing it is insolvent, arguing it is losing US$4 million a month. An affidavit NewPage filed Wednesday with the court says the parent company has been trying since April to sell the paper mill, which has lost US$50 million over the last year.
While NewPage argued its case in court Friday, Premier Darrell Dexter announced a $15-million plan to help keep the mill's woodlands operation intact.
The seven-point plan includes stockpiling wood for future use, an expansion of the province's silviculture program, up to $3.5 million to develop specialized forestry training programs, and enlisting a world-market specialist to conduct a study on newsprint and high-gloss paper to ensure the mill's future viability.
Dexter said the plan will employ about 500 people in the Port Hawkesbury region.
“This seven-point action plan is designed to get us through the next three months as we prepare for the resale of this plant,” Dexter said in a statement.
“I am confident and optimistic that a buyer will recognize this valuable asset and ensure its successful future.”
The mill, which opened in 1962, is scheduled to indefinitely shut down its papermaking machines in phases on Saturday and Sept. 16.
A closure would affect about 1,000 workers. That includes 550 people who work at the mill and 50 who work for the company's woodlands operation. Another 400 forestry contractors feed the mill with pulp wood.