Northern Pulp creditor protection extended to end of next June

A Supreme Court judge in British Columbia extended creditor protection for Northern Pulp through the end of next June on Tuesday, but officials predict there will be a resolution before then.

That could come from the resumption of an ongoing court action between the company and Nova Scotia government or a mediated settlement.

“The positive is the parties are still talking,” Lance Williams, a lawyer for Northern Pulp told Justice Shelley Fitzpatrick on Tuesday.

A report by court-appointed monitor EY said the two sides are expected to be back before Fitzpatrick early in 2024 if officials with the province and company reach a mediated settlement. Otherwise, it would likely be March or April when the two sides appear to determine next steps in what could be a protracted court battle.

When the two sides entered court-ordered, non-binding mediation in April 2022, they agreed to pause any legal actions. Although those talks, which are confidential, continue, court documents indicate they are nearing a conclusion.

In the absence of a settlement, the company is looking to sue the province for $450 million in damages as a result of the early end of its lease to use a provincially owned effluent treatment plant at Boat Harbour to treat mill waste.

The Pictou County-based mill was forced to shut down in 2020 when it failed to secure approval to build a replacement treatment facility. The former Liberal government passed the Boat Harbour Act with unanimous support in 2015, legislation that set a deadline for when effluent had to stop flowing into the former tidal estuary located next to the Pictou Landing First Nation.

According to the monitor’s report, the province could argue that if creditor protection proceedings are no longer required, then consideration should be given to monetizing the mill’s assets for the benefit of stakeholders.

The Nova Scotia government would also seek to have questions about the authority of amendments to the Boat Harbour Act settled in a Nova Scotia court as part of civil actions already filed by Northern Pulp. The Tory government amended the act in 2022 because it wanted to clarify the original intent of the bill. Company officials have countered that the amendment was an attempt to retroactively protect taxpayers from liability related to the Northern Pulp lawsuit.

Court documents filed by the company as part of the creditor protection proceedings indicate that the goal remains to restart the mill with a new effluent treatment facility, but for now its efforts to get environmental assessment approval for that plan remain on hold. The mill has been idled to reduce maintenance costs.

It’s anticipated the environmental assessment process would need to be restarted should the company decide to try again to move ahead.

Williams told the court on Tuesday that if the mill is restarted, “the funding would have to come from a settlement with the province” or with the proceeds from winning their court case against the government.