Hartland selectmen hire attorney
November 18, 2010
HARTLAND -- Lawyers representing Prime Tanning will be in U.S. Bankruptcy Court in Bangor today for the first hearing on the company's petition to reorganize its debt and finances through bankruptcy protection.
And the town of Hartland, which is owed more than $300,000 in late tax payments and other debts by the leather-making company, will also be represented during the proceedings.
A day after the landmark tannery announced its bankruptcy filing, Hartland selectmen on Wednesday hired the law firm Eaton Peabody. Representing the town will be Nathan J. Martell, a lawyer from the firm's Bangor office who specializes in bankruptcy and debtor rights.
Selectmen met at the town office Wednesday afternoon and entered into executive session to discuss the bankruptcy proceedings with Martell on a conference call, according to Town Manager Susan Frost.
"We just feel it's important to have legal representation and we're going to have it," Chairman Judy Alton said following the conference call. "We're real pleased we were able to obtain him as quickly as we could."
Alton said selectmen did not discuss the cost of the legal representation.
Contacted on Wednesday, Paul Larochelle, president of Prime Tanning, declined further comment on the bankruptcy filing beyond what the company had already said in its statement issued Tuesday, though he added that the company "anticipates positive results" from today's hearing.
"We're planning on proceeding with increased production levels and filling orders," Larochelle said of the tannery, which has about 180 employees.
Through Chapter 11 protection, the company is seeking to revive itself through a court-approved reorganization plan, freeing it from the threat of creditor's lawsuits while restructuring its finances.
In its bankruptcy filing, Prime Tanning names dozens of creditors and lists its liabilities totaling up to $10 million.
The company blames its financial woes on "legacy liabilities" from unprofitable operations at a now-closed facility in Berwick and at a now-sold operation in Missouri. It also points to pending, expensive litigation in Missouri, where residents are suing Prime Tanning who allegedly sold fertilizer containing a cancer-causing chemical to farmers.
Also known as Irving Tanning Co., the company's statement said it intends to emerge from bankruptcy protection "as a lean and profitable stand-alone company."
In order to stay financially afloat, the company said it had reached an agreement with the Maine Rural Development Authority for a new loan and an agreement with the firm Porter Capital for cash during the Chapter 11 proceedings.
John Cleveland, executive director of the Maine Rural Development Authority, said Wednesday that his state agency is loaning $550,000 to Prime Tanning.
In 2005, the tannery secured a $500,000 loan from the development authority and has so far paid off $100,000 of that, Cleveland said.
That would bring the tannery's outstanding bill with the development authority to $950,000.
Cleveland said the $550,000 in newly loaned money is intended as a short-term, one-year loan, at an interest rate of 5.25 percent.
While the new loan hasn't officially closed yet, Cleveland said the development authority's board has agreed to it.
"The loan's primary motivation -- the purpose is to help keep the company solvent and in operation," Cleveland said. "Our understanding is it will be used to purchase materials to keep the company operating."
The development authority will also have legal representation during the bankruptcy proceedings, Cleveland said.
"We have a current loan with them, so the Maine Rural Development Authority's interests is to see the company continues to operate so we can cover our current loan," Cleveland said. "And our mission is to create and maintain jobs in Maine. In this case, it's something on the order of 180 positions."
Courtesy of the Kennebec Journal
By Scott Monroe
Staff Writer
smonroe@mainetoday.com
