Eastern Pulp and Paper Threatened with Foreclosure
BANGOR -- Northborough Capital Corp., owed more than $816,000 on a mortgage, has filed a request asking a federal bankruptcy judge to sell off the assets of Eastern Pulp and Paper Corp., to pay off its debts if the creditor is not allowed to foreclose on the mill’s headquarters in Massachusetts.
Eastern has been in Chapter 11 bankruptcy for almost three years. If the proceedings were converted to Chapter 7, the company would be forced to liquidate Lincoln Pulp and Paper Company in Lincoln and Eastern Fine Paper Inc. in Brewer, which together employ more than 700 people.
“There will be no liquidation,” said George Marcus, who described the request as a pressure tactic. “It’s not going to happen,” said the attorney representing Eastern Pulp and Paper.
Northborough said in documents submitted to the court that Eastern is in default on its mortgage and has not taken seriously six offers to buy its three real estate parcels, including its headquarters in Amherst, Massachusetts.
Northborough will make its foreclosure appeal to U.S. Bankruptcy Judge James Haines on July 16 in Portland. If the request to take action is denied, it is expected to ask that the proceedings be converted to Chapter 7 and that the mills be liquidated.
Eastern has blamed economic conditions for its failure to file a reorganization plan, and has cited the depressed paper market as the reasons it has undertaken drastic cost-cutting measures, including laying off 125 workers in Brewer last month.
-- Ken Anderson 06/13/02.