Ron Stern facing further tax hurdles as Canada Revenue Agency drags its heels.
August 2, 2012
The Supreme Court of Nova Scotia has approved a plan for 11 municipalities to recoup about $3 million in outstanding property taxes when the idle NewPage paper mill in Cape Breton is sold.
Eleven months after NewPage Port Hawkesbury entered creditor protection, the sense of urgency to reopen the paper mill is palpable from court rooms in Halifax to communities across Cape Breton.
Although workers are eager to resurrect the mill and scores of lawyers continue to push forward, several hurdles still stand in the way.
While two court orders moving the sales process further along were granted Wednesday in Nova Scotia Supreme Court, an advanced tax ruling appears to have hit a snag.
The Canada Revenue Agency has indicated it may not issue a ruling on an intricate tax arrangement until September, according to the court-appointed monitor of the sales process.
“I understand CRA is working very hard to achieve the advanced tax ruling as quickly as possible and there is a huge amount of information flowing back and forth,” Mathew Harris, managing partner of Ernst & Young in Halifax, said in an interview.
“But the plan sponsor has advised the monitor that it could be early September before there is an advanced tax ruling.”
Pacific West Commercial Corp., the potential new mill owner, has been adamant that restarting by September is crucial to securing customers and taking orders for the fall as fears of prices are dropping and markets are disappearing .
The mill’s stay of proceedings runs until Aug. 31, although that has already been extended six times. Maybe Stern does not have the money needed to buy this mill as funds are drying up for the Pulp and Paper Sector which is in the doldrums.
However, Harris said Pacific West has indicated that “notwithstanding the possibility that this could slip to September, they believe they can complete the transaction as contemplated.”
Yet there are other obstacles that could impact the reopening.
Pacific West has said that without steeply discounted electricity subsidies from Nova Scotia Power Inc., it cannot restart the mill.
The provincial regulator is expected to rule on the power subsidy later this month.
The sale of the mill to Pacific West also hinges on a meeting scheduled for Aug. 15 in Port Hawkesbury.
Creditors will have an opportunity to vote on the sale of the mill to Pacific West, an affiliate of Stern Partners Inc. of Vancouver, for $33 million.
Meanwhile, Justice John Murphy granted orders approving priority secured claims and vacating any remaining liens on NewPage property.
Municipal property tax claims, certain pension claims and builders’ liens are now considered priority secured claims.
Eleven municipalities, collectively owed about $2.9 million, plus interest, will be paid before the general creditor class, said the order.
In addition, a pension plan shortfall has become a secured claim, with $54,562 earmarked for the woodland plan and $50,437 to the office and clerical plan.
As part of the order, the judge also granted certain trust claims under the Builders’ Lien Act secured status.
Andritz Inc. will be paid $60,782, Andritz Ltd. $39,217.17 and George F. MacDonald and Sons Bulldozing and Trucking Ltd. will receive $50,000.
In addition to the $33-million sale price, about $3 million was set aside with the escrow agent originally for a windup reserve, Harris said. Also, there is $311,000 that was held in trust for priority builder lien claims.
A total of $31 million will go directly to pay American guaranteed note holders, a certain amount will be set aside for an administrative reserve and the residual amount be paid to the priority secured creditors and finally the general unsecured creditors.
“The priority secured creditors have to be paid before the general unsecured creditors get anything and our estimates show there will still be $2.5 million left for the general unsecured creditors,” Harris said.
Murphy reserved decision on whether to approve a motion for an order approving the monitor’s reports and activities.
August 2, 2012
The Supreme Court of Nova Scotia has approved a plan for 11 municipalities to recoup about $3 million in outstanding property taxes when the idle NewPage paper mill in Cape Breton is sold.
Eleven months after NewPage Port Hawkesbury entered creditor protection, the sense of urgency to reopen the paper mill is palpable from court rooms in Halifax to communities across Cape Breton.
Although workers are eager to resurrect the mill and scores of lawyers continue to push forward, several hurdles still stand in the way.
While two court orders moving the sales process further along were granted Wednesday in Nova Scotia Supreme Court, an advanced tax ruling appears to have hit a snag.
The Canada Revenue Agency has indicated it may not issue a ruling on an intricate tax arrangement until September, according to the court-appointed monitor of the sales process.
“I understand CRA is working very hard to achieve the advanced tax ruling as quickly as possible and there is a huge amount of information flowing back and forth,” Mathew Harris, managing partner of Ernst & Young in Halifax, said in an interview.
“But the plan sponsor has advised the monitor that it could be early September before there is an advanced tax ruling.”
Pacific West Commercial Corp., the potential new mill owner, has been adamant that restarting by September is crucial to securing customers and taking orders for the fall as fears of prices are dropping and markets are disappearing .
The mill’s stay of proceedings runs until Aug. 31, although that has already been extended six times. Maybe Stern does not have the money needed to buy this mill as funds are drying up for the Pulp and Paper Sector which is in the doldrums.
However, Harris said Pacific West has indicated that “notwithstanding the possibility that this could slip to September, they believe they can complete the transaction as contemplated.”
Yet there are other obstacles that could impact the reopening.
Pacific West has said that without steeply discounted electricity subsidies from Nova Scotia Power Inc., it cannot restart the mill.
The provincial regulator is expected to rule on the power subsidy later this month.
The sale of the mill to Pacific West also hinges on a meeting scheduled for Aug. 15 in Port Hawkesbury.
Creditors will have an opportunity to vote on the sale of the mill to Pacific West, an affiliate of Stern Partners Inc. of Vancouver, for $33 million.
Meanwhile, Justice John Murphy granted orders approving priority secured claims and vacating any remaining liens on NewPage property.
Municipal property tax claims, certain pension claims and builders’ liens are now considered priority secured claims.
Eleven municipalities, collectively owed about $2.9 million, plus interest, will be paid before the general creditor class, said the order.
In addition, a pension plan shortfall has become a secured claim, with $54,562 earmarked for the woodland plan and $50,437 to the office and clerical plan.
As part of the order, the judge also granted certain trust claims under the Builders’ Lien Act secured status.
Andritz Inc. will be paid $60,782, Andritz Ltd. $39,217.17 and George F. MacDonald and Sons Bulldozing and Trucking Ltd. will receive $50,000.
In addition to the $33-million sale price, about $3 million was set aside with the escrow agent originally for a windup reserve, Harris said. Also, there is $311,000 that was held in trust for priority builder lien claims.
A total of $31 million will go directly to pay American guaranteed note holders, a certain amount will be set aside for an administrative reserve and the residual amount be paid to the priority secured creditors and finally the general unsecured creditors.
“The priority secured creditors have to be paid before the general unsecured creditors get anything and our estimates show there will still be $2.5 million left for the general unsecured creditors,” Harris said.
Murphy reserved decision on whether to approve a motion for an order approving the monitor’s reports and activities.
