At the end of this month, Northern Pulp and six of its affiliates will be back in the British Columbia Supreme Court, and odds are they will ask for and get yet another extension — the seventh to date — of the creditor relief they’ve been afforded under the federal Companies Creditor Arrangement Act.
Northern Pulp declared itself “insolvent” in June 2020, and since then has been enjoying creditor protection in the British Columbia Supreme Court.
Insolvent it may be, but Northern Pulp still seems to have no shortage of cash to bankroll legal assaults on Nova Scotia’s government and laws.
It helps the Northern Pulp companies’ finances, of course, that they have been granted a holiday of any repayments on more than $85 million they owe the province, can save money by short-changing on pension payments. In October 2021, Nova Scotia’s Superintendent of Pensions filed an affidavit with the British Columbia Court expressing “significant concerns” about Northern Pulp’s “failure to make contributions” of special pension payments after 2020.
It also helps Northern Pulp and its affiliates — known in legalese as the “petitioners” — that in October 2021, the British Columbia Supreme Court allowed them to use $450,000 from the “Interim Financing Facility” to fund litigation expenses for their and their owners’ lawsuit against the province of Nova Scotia.
The lenders for that financing facility are none other than Northern Pulp’s parent Paper Excellence Canada Holdings, and the related Pacific Harbor North American Resources Limited, a private company incorporated in Hong Kong in March 2020.
There is much that is perplexing about this complex and convoluted corporate puzzle, and this creditor protection case.
The first application documents to the court in June 2020 show that Northern Pulp’s largest creditor by far was its owner, “Paper Excellence Corporation.” That debt was incurred mostly because of debts that Paper Excellence companies in British Columbia and Saskatchewan offloaded on Northern Pulp between 2012 and 2015.
As a result of these transactions, Northern Pulp owed Paper Excellence more than $213 million.
As the Halifax Examiner reported here:
The “consolidated liabilities” of the petitioners amount to $311,019,464, according to court-appointed monitor Ernst & Young that stipulates that it is relying entirely on “unaudited financial information” and the petitioners’ sources for all the information in its first monitor report. In summary, the liabilities are:
- Province of Nova Scotia (secured) — $84,874,246
- Province of Nova Scotia (unsecured) — $1,300,000
- Paper Excellence Canada (secured) — $29,859,548
- Paper Excellence Canada (unsecured) — $183,453,581
- Employee related — $7,120,000
- Timberlands owners — $1,353,496
- Trade payables — $3,058,593
So from whom was Northern Pulp really seeking creditor relief ? Nova Scotia, former employees, and its myriad suppliers? Or from its owner and largest creditor, Paper Excellence, an expanding and apparently wealthy company that belongs to an even wealthier corporate family?
A very, very wealthy corporate family
Northern Pulp is part of the Paper Excellence empire, which in turn is part of the multi-billionaire Widjaja family’s global corporate behemoth, the Sinar Mas Group with its “crown jewel,” Asia Pulp & Paper (APP).
APP lives on, despite having set the record in 2001 for Asia’s worst corporate default — of US$ 13.4 billion — and also for “destructive forestry practices” that disqualified APP from Forest Stewardship Council certification.
Paper Excellence maintains it is separate from Asia Pulp & Paper, for obvious reasons, but the fact is it’s still part of the Sinar Mas Group that is owned by the Widjaja family.
So, I think it’s safe to say that Paper Excellence and its owners are not what you could call cash-strapped.
In the last two years since Northern Pulp sought creditor protection in the British Columbia Supreme Court, its owner Paper Excellence has spent billions of dollars acquiring pulp mills in Brazil (after a contentious court battle), the US, and Canada.
Recently Paper Excellence has been on the receiving end of public money, like this recent grant of $8.6 million from the British Columbia government.
Paper Excellence also owns two pulp mills in southern France. As the Examiner reported here, its mill in Tarascon, in southeastern France, seems to operate with a game plan remarkably similar to Northern Pulp’s. First the mill pollutes, then its owner says it’s bankrupt and seeks creditor protection, and then it seeks public bailout money.
Northern Pulp is pleading too poor to repay its creditors, but it appears to have no problem spending money to try get what it wants out of the province.
Here is a quick rundown of some of the things Northern Pulp has been up to lately trying to bring the government of Nova Scotia — and thus Nova Scotians who elect it and pay all the bills — to heel, while simultaneously to try to sell itself to Nova Scotians with a slick PR campaign run by its “friends.”
Let’s start with the legal and judicial cases that Northern Pulp and its owners have going.
On a website called “Tomorrow’s Mill,” the press releases describing the various cases are stacked deep, and portions of those press releases often make their way verbatim and unchallenged into media reports.
A press release from April 13 entitled “Northern Pulp opposes proposed retroactive amendments to the Boat Harbour Act,” announced that Northern Pulp was going to Nova Scotia’s Law Amendments Committee with a 20-page document signed by Bruce Chapman, “General Manager, Northern Pulp Nova Scotia Corporation,” but obviously involving a lot of expensive legal expertise Chapman doesn’t have.
Northern Pulp was opposing Bill 143, which Premier Tim Houston’s government brought in to change wording in the 2015 Boat Harbour Act, to try to protect Nova Scotians from the $450 million lawsuit that Northern Pulp and its owners have launched against the province.
So Northern Pulp, a Paper Excellence company, now thinks it should get to tell Nova Scotians how their laws are written?
That’s not even half of the half of it.
There is another press release from April 12, 2022 entitled “Northern Pulp seeks Ministerial Review and files for Judicial Review of Environmental Assessment Terms of Reference.”
This statement informs us that Northern Pulp thinks Nova Scotia’s Minister of Environment and Climate Change (NSECC) should amend the Terms of Reference for the Class II environmental assessment the province will be doing of the proposed mill “transformation and effluent treatment project.”
For the record: those Terms of Reference for the environmental assessment were meticulously and painstakingly developed by professional public servants (at considerable public expense) employed by and in the service of Nova Scotians.
Still, Northern Pulp thinks it should have a hand in writing the Terms of Reference, and said as much in a request for a ministerial review to Timothy Halman, the province’s minister of Environment and Climate Change, who was elected by the people of Dartmouth East to represent them in the Nova Scotia Legislature.
But even that isn’t all.
Northern Pulp has also made an official application to the Nova Scotia Supreme Court for a Judicial Review of the Terms of Reference.
This isn’t the first time Northern Pulp has gone to the Nova Scotia Supreme Court to complain about a decision made by Nova Scotia Environment.
In January 2020, Northern Pulp filed a request with the Nova Scotia Supreme Court for a judicial review of the province’s decision that the company develop a full environmental assessment report as part of the environmental assessment for its proposed replacement effluent treatment facility.
Related: Deciding Northern Pulp’s future
In May 2021, Northern Pulp withdrew its replacement effluent treatment plant project from the Nova Scotia environmental process, and also its request for a judicial review of the Minister’s decision that an environmental assessment report was required.
Now, here we are a year later and Northern Pulp is back again in the Nova Scotia Supreme Court asking for a new judicial review, this time of the Terms of Reference for a new environmental assessment for the mill transformation.
The Nova Scotia Supreme Court is also where Northern Pulp and its owners launched the lawsuit for $450 million against the province in December 2021.
Then there’s the creditor protection
Recall that when it was seeking creditor protection, Northern Pulp and its affiliates (almost all Nova Scotia-registered companies owned by Paper Excellence) chose not a court in Nova Scotia, but the Supreme Court of British Columbia.
Paper Excellence Canada may be registered in British Columbia, but like all the ostensibly Canadian companies in the complex Sinar Mas Group family of companies resident in this country, it is — according to Statistics Canada’s Inter-corporate Ownership — controlled from Indonesia.
So far, the British Columbia Supreme Court has been, well, let’s just say “kind” to Northern Pulp and the other “petitioners” under creditor protection, giving them just about everything they’ve asked for.
That “kindness” reached new heights on April 1, when British Columbia Supreme Court Justice Shelley Fitzpatrick ignored the arguments of Nova Scotia legal counsel Robert Grant and Maurice Chiasson, and ordered Nova Scotia into a “mediation” process in the BC Court.
The mediation will be handled by a “court appointed” but Northern Pulp-chosen mediator, retired Supreme Court of Canada judge Thomas Cromwell.
Justice Fitzpatrick granted Paper Excellence companies’ request that the mediation process be held in the British Columbia Supreme Court to settle claims that Paper Excellence had made against Nova Scotia (remember that $450 million lawsuit) in the Nova Scotia Supreme Court.
If you find that odd, you can be excused. So do Nova Scotia legal counsel Robert Grant and Maurice Chiasson.
In their response to Northern Pulp’s application to the British Columbia Court for this forced mediation process, Grant and Chiasson wrote that it was “not appropriate” for many reasons, and wrote that Northern Pulp was seeking to “shift the oversight of the Nova Scotia Litigation” into the British Columbia Supreme Court.
The legal stick, and also a carrot
Northern Pulp and its owners are not relying merely on the legal sticks they are wielding in courts on two sides of the country.
The Paper Excellence company has also hired some high-powered help for its cause.
In January this year, Northern Pulp (which, remember, is “insolvent”) hired Sasha Irving as its Vice President, Corporate Affairs.
It appears that Irving now has two full-time jobs, as her LinkedIn page says she’s still a “Principal” at Public Affairs Atlantic, the PR firm where she’s been since September 2019.
It’s unlikely that Irving — who describes herself as a “Strategic Communications and Public Affairs Executive” — came cheap.
In the past decade she’s held some high profile positions, the kind that tend to be amply paid.
She’s been “Vice President, Market and Business Planning, Emera Technologies” at Nova Scotia Power’s parent company Emera, and a “Vice President, Stakeholder Relations & Public Affairs” at Nova Scotia Power.
From 2006 until August 2007, Irving was the Director of Communications for Progressive Conservative Premier Rodney MacDonald.
During the 2003 provincial election, she was the press secretary for Progressive Conservative Premier John Hamm, who in 2010 became chair of the board of Northern Pulp, where he remained until leaving quietly in early 2020, shortly after the mill went into hibernation.
Irving doesn’t include this 2003 gig with Hamm on her LinkedIn page, which is a little odd, as she does provide a professional history going back to the 1990s when she was Eastern New Brunswick Operations Manager of Pizza Hut.
Public Affairs Atlantic, where Irving retains her position as a Principal, is the PR firm that appears to have run the campaign that resulted in the gutting of the Biodiversity Act in 2021.
And that brings us to another campaign, which looks a lot like the one waged so successfully against the Biodiversity Act.
“Friends of a New Northern Pulp”
The latest campaign to try to sell Northern Pulp and its plans to revamp the 55-year-old pulp mill in Pictou County (with $350 million it hopes to get out of Nova Scotians in that lawsuit) is being run by a group calling itself “Friends of a New Northern Pulp.”
The campaign involves a website, and an onslaught of radio, newspaper, and social media ads.
Such PR campaigns aren’t cheap.
The “Friends of a New Northern Pulp” group is led by mill owners, big industrialists, and forestry operators, but to imagine that Northern Pulp isn’t somehow involved beggars belief.
The campaign’s messaging is relentless, and it has the hallmarks of PR spin-doctors all over it.
Convenient or coincidence that Sasha Irving is now a Northern Pulp Vice President?
Not going to end any time soon
For anyone who thought the closing of Boat Harbour and the pulp mill in January 2020 marked the end of the decades-long saga of the mill and the protests it spawned for more than half a century, it’s time for a rethink.
With the ongoing creditor protection case and the court-mandated mediation process in the British Columbia Supreme Court, a lawsuit and a judicial review in the Nova Scotia Supreme Court, and the company apparently unwilling to stop trying to rewrite Nova Scotia’s environmental assessment process to suit it, there is no end in sight for the Northern Pulp story.
The ninth report of the Court Monitor — Ernst & Young — issued on March 29 says that Northern Pulp and its affiliates have “approximately $7 million of cash on hand,” $6 million of which came from the Interim Financing Facility, which has so far disbursed $21 million to the Northern Pulp companies.
The report also states that as of March 29, Northern Pulp had spent “approximately $270,000 on litigation matters.”
The next hearing in the British Columbia Court is April 29, when, according to the Court Monitor, “a more fulsome update on the Petitioners cash flow and litigation requirements” will be presented.
This could all get very painful and very expensive for Nova Scotia.
And the end is not nigh.