RW attorneys Erik Stumpfel, Hans Peterson and Jonathan Hunter recently represented the interests of the City of Old Town in connection with the proposed bankruptcy sale of the Old Town Fuel and Fiber mill, owned by Red Shield Acquisitions LLC, to Expera Old Town LLC.
At issue for the City were $1.7 million of unpaid real estate and personal property taxes plus sewer charges owed by Red Shield. As originally proposed, Expera, upon purchase of the property, would have assumed the obligation to pay the City’s real estate and sewer liens, about $600,000 total. However, because Red Shield’s personal property had been transferred to Red Shield’s principal lender prior to opening of the bankruptcy case, no provision was made in the proposed order approving the sale for payment of $1.1 million in personal property tax liens also owed by Red Shield.
By filing appropriate objections with the bankruptcy court and negotiating with legal counsel for Expera, RW was able to obtain language in the sale order requiring Expera to assume the $1.1 million personal property tax obligations and expressly recognizing the validity of the City’s personal property tax liens. If Expera fails to pay the taxes concerned, the City will be entitled to exercise its rights as a lien holder with respect to the personal property, or sue Expera directly on the assumed obligation.
The sale to Expera was approved and closed on December 12, 2014. Expera is in the process of re-starting the mill, and expects to re-employ all or most of the approximately 200 workers who were idled by the bankruptcy and preceding Red Shield shut-down.