Justice Shelley Fitzpatrick, presiding over the creditor protection case of Northern Pulp, the owner of the 55-year-old pulp mill in Pictou County, and six of its affiliates in the British Columbia Supreme Court, has granted Northern Pulp what it wanted, namely a six-month extension of the proceedings and an additional $7 million in interim financing, along with $5 million already approved but not yet advanced.

The decision comes as no surprise, as the Examiner reported earlier today.

This is the eighth time Justice Fitzpatrick has approved such an extension since Northern Pulp et al declared themselves “insolvent” in June 2020, and sought protection under the Companies’ Creditors Arrangement Act in the British Columbia court.

What is something of a surprise is the position taken by the province of Nova Scotia.

When Northern Pulp asked for a similar extension and for a court-ordered mediation process in the spring of 2022, counsel for Nova Scotia opposed and argued stridently against both the extension application and the forced mediation process led by former Supreme Court Justice Thomas Cromwell, who was requested by Northern Pulp et al.

The mediation process involves Northern Pulp, the province, Paper Excellence, and Hervey Investment BV (Netherlands), which last year filed a lawsuit against the province for $450 million in the Nova Scotia Supreme Court.

This time, counsel for the province, Sean Foreman and Debbie Brown, took no position on the Northern Pulp application.

In his 13th affidavit to the court requesting the extension of the CCAA proceedings and the mediation, Paper Excellence general manager Bruce Chapman wrote that Northern Pulp et al “have engaged in good faith in the Mediation Process with the Mediator.”

Although the proceedings of the mediation process are confidential, Ernst and Young, the court monitor, reported to Justice Fitzpatrick that since it began, the “temperature has come down.”

Because the mediation is confidential, it is not possible to gauge what is behind the lowered “temperature” in the court case, and the decision by Nova Scotia counsel not to oppose the latest application by Northern Pulp et al to extend the CCAA creditor protection and mediation for another six months.

Just seven months ago, counsel for the province wrote that it did not “deem it to be in the public interest to engage in such negotiation at this time.”

Since then, while no further action has been taken on the lawsuit against the province, it is not clear what, if anything, has changed.

Chapman stated in his affidavit that if the extension were granted, Northern Pulp et al “do not anticipate making any Post-2020 Special Pension Payments,” which amount to $3.34 million.

Counsel for Nova Scotia’s superintendent of pensions sent notice that the superintendent would not attend today’s hearing. He referred the court to the April 2022 submission in which the superintendent expressed “serious concerns” about the failure of Northern Pulp to pay the special pensions.

However, counsel for the superintendent of pensions didn’t oppose Northern Pulp’s latest application for an extension.

Northern Pulp, which launched a judicial review over the final Terms of Reference set by Nova Scotia Environment and Climate Change for its proposed mill refit and new effluent treatment facility, and still appears to be making extraordinary demands of the province when it comes to the that environmental assessment, as the Examiner reported here.

The province (people) of Nova Scotia are Northern Pulp’s second largest creditor, with an outstanding debt of nearly $86 million, much of that because of a 2010 loan for $75 million for the purchase of 475,000 acres of woodland in Nova Scotia.

That debt was incurred when Paper Excellence companies which shifted large amounts of debt from its companies in western Canada to Northern Pulp.

Northern Pulp is a Paper Excellence company, and thus part of the vast and immensely wealthy corporate empire of the Widjaja family, which includes Asia Pulp & Paper and the Sinar Mas Group.

Northern Pulp’s largest creditor by far is Paper Excellence Canada, which together with Hervey Investment domiciled in Netherlands, a popular corporate tax haven, owns the six companies under creditor protection in the British Columbia Supreme Court. Northern Pulp et al owe their owner, Paper Excellence, more than $212 million.

According to Bruce Chapman’s first affidavit to the British Columbia Supreme Court in June 2020, much of that debt was incurred when Paper Excellence companies shifted large amounts of debt from its companies in western Canada to Northern Pulp between 2012 and 2015.

The latest extension of the Northern Pulp et al CCAA creditor protection expires on April 28, 2023.

Joan Baxter is an award-winning Nova Scotian journalist and author of seven books, including "The Mill: Fifty Years of Pulp and Protest." Website: www.joanbaxter.ca; Twitter @joan_baxter

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