Northern Pulp has asked the Supreme Court of British Columbia for yet another extension of the creditor protection it has been enjoying since June 2020.
The extension request is the 12th Northern Pulp has made, and if Justice Shelley Fitzpatrick grants it in a court hearing today in the British Columbia court, creditor protection will be extended until June 2024.
As the Halifax Examiner reported here, Northern Pulp’s largest creditor is its owner, Paper Excellence, to which it owes more than $213 million.
Paper Excellence is part of the multi-billion-dollar corporate empire of the billionaire Widjaja (also Wijaya) family of Indonesia, and its links to other Wijaya family businesses were a focus of the recent International Consortium of Investigative Journalists’ “Deforestation Inc.” investigation in which the Examiner participated, along with CBC, Glacier Media in BC, Radio France, and Le Monde in France.
Northern Pulp’s other big creditor is the province of Nova Scotia, to which it still owes $86 million. That is not being repaid while the company is under creditor protection. Nearly $65 million of that outstanding debt is from the 2010 loan of $75 million that the government of Darrell Dexter offered to Northern Pulp for the purchase of 475,000 acres of land in Nova Scotia.
Since 2020, Northern Pulp has also stopped Special Pension Payments, an amount totalling approximately $3.34 million for each of 2021 and 2022, according to documents Nova Scotia’s Superintendent of Pensions has filed with the BC court.
However, Northern Pulp’s creditor protection case is about far more than just unpaid debts to its owner, the province of Nova Scotia, and dozens of other smaller creditors.
It is also about the lawsuit the Northern Pulp family of companies, together with its immediate owners Paper Excellence and Hervey Investment B.V. (Netherlands), filed against Nova Scotia in December 2021. The lawsuit is for $450 million in revenue the companies claim they lose because of the closure of the mill in 2020 after it was obliged to close its Boat Harbour effluent treatment facility following the passing of the Boat Harbour Act in 2015.
In April 2020, despite strong opposition to the move by Nova Scotia’s legal counsel, Justice Fitzpatrick agreed to a request from Northern Pulp that the various parties involved enter into mediation under Justice Thomas Cromwell.
While the mediation is ongoing, Northern Pulp and Nova Scotia also agreed to pause all legal matters related to the lawsuit.
Since then, all parties involved have been meeting behind closed doors and the proceedings are confidential.
In his affidavit to the court requesting the latest extension, Dale Paterson, who describes himself as “acting mill manager” of Northern Pulp Nova Scotia Corporation and a “business person” in New Glasgow, Nova Scotia, notes that because of the confidentiality of the proceedings, he cannot “provide a detailed summary of the Mediation Process.”
However, Paterson states:
The Mediation Process is coming to a conclusion … While it was anticipated that a conclusion would have been reached by this date, the Mediation Parties have continued to engage with the Mediator, and have not yet reached either an agreement or an impasse. The Petitioners [Northern Pulp and its family of companies] anticipate they will either have reached a mediated agreement or will be seeking alternatives to a mediated settlement, which includes litigation with the Province. It is anticipated that, should the alternatives be necessary, there will be material relief sought by both the Petitioner and the Province, and it will be necessary to schedule the hearing of those applications.
In their response to Northern Pulp’s request for an extension to its creditor protection, counsel for Nova Scotia Sean Foreman and Debby Brown “take no position.”
Foreman and Brown write:
The province confirms that it continues to participate in good faith in the confidential mediation process with the Petitioners, the Monitor [Ernst & Young], and Mediator Cromwell, which is expected to conclude in the near future.
Counsel for the Province will be attending in person on December 12, 2023, to discuss next steps and timing / scheduling for required motions to resolve outstanding litigation issues should the mediation conclude without agreement, to be outlined by the Monitor in its Report being filed with the court.
Today’s court hearing in the Supreme Court of British Columbia is scheduled for 2pm, Nova Scotia time.
What a terrible situation.