Court grants Northern Pulp extension on creditor protection

The Northern Pulp mill in Abercrombie Point, N.S., viewed from Pictou, N.S., on Sept. 18, 2019. (Robert Short/CBC - image credit)
The Northern Pulp mill in Abercrombie Point, N.S., viewed from Pictou, N.S., on Sept. 18, 2019. (Robert Short/CBC - image credit)

Officials with the Northern Pulp mill should know soon whether they'll reach a settlement with the Nova Scotia government over the Pictou County-based operation's 2020 shutdown and other matters, or if the two sides will find themselves back in court.

The company received a 10th extension of its creditor protection during a brief hearing in a British Columbia court on Wednesday. A judge agreed to the company's request to extend the stay until Nov. 30.

Lawyers for the Nova Scotia government did not oppose the company's request.

The B.C. court ordered Northern Pulp and the Nova Scotia government into non-binding mediation in 2022 as part of the creditor protection process in an attempt to try to resolve legal disputes between the two sides. The most recent court documents indicate that the process could be wrapping up soon. Details of those talks are confidential.

"The mediation process is in a conclusory stage that will hopefully give greater clarity around whether a mediated settlement is possible," lawyers for Northern Pulp say in court filings.

Legal wrangling on hold during mediation

During the mediation process, the two parties agreed to pause all legal challenges and proceedings.

Those matters include the company filing papers to sue the province for up to $450 million because the government-ordered shutdown of Northern Pulp's effluent treatment facility at Boat Harbour happened 10 years before its lease for the site expired, forcing the mill to close.

The company also applied for a judicial review of the terms of reference the Nova Scotia Environment Department set for the work required by the company to overhaul the mill and restart it.

Lawyers for Northern Pulp say that active field work by an engineering firm has been suspended "as a prudent strategy to conserve cash pending an outcome in the mediation process. Once an outcome is determined, the petitioners can make a more informed decision how their restructuring will proceed and how to proceed with the mill [environmental assessment] process."

A report from court-appointed monitor Ernst & Young says they believe the mediation process would benefit from some additional time to determine if a resolution can be reached, but that if it "does not make reasonable progress or should the pause be lifted, the proposed stay period will also allow time for the parties to pivot to alternative options."

No agreement reached to sell biomass

Documents filed as part of Wednesday's hearing also indicate that attempts by Northern Pulp to find other uses for wood supply have failed.

During its last court appearance, the company indicated in court documents that it was in talks with an unnamed electric utility to burn hurricane-felled trees in the mill's power boiler and sell the biomass energy to the utility.

But records for Wednesday's hearing indicate that the two parties could not reach a power-purchase agreement.

Northern Pulp was forced to close in January 2020 when the company failed to secure environmental approval from the province to construct a new effluent treatment facility.