22 March 2009

Whose side will they be on in an Abitibi bankruptcy?

The provincial government may find itself in a fight with AbitibiBowater pensioners in the province very shortly, as a direct result of the expropriation bill forced through the legislature last December.

If the paper company is unable to come to an arrangement with the creditors, it will likely have to file for bankruptcy protection.

One of the biggest creditors looking for cash will be AbitibiBowater retirees, including people who are retiring at the end of the month or who already have retired from the paper mills at Stephenville and Grand Falls-Windsor. There’ll also be a bunch looking for severance but that’s another matter.

That’s where the expropriation comes in.

The provincial government expropriated the company’s most lucrative assets – the hydro bits – in anticipation the company might go bankrupt.  Rather than let the trustees sell off the assets, the provincial government probably figured they could get the whole thing for nothing.  If the company sued, the thing will take years in court anyway.   In the meantime, the company is faced with the huge cost of the environmental clean-up at the mill.

The government gets the sweet bits and the company gets the bile. The people back the government.  Everybody is happy.

Well, not exactly.

There are those Abitibi pensioners.

They’ll be one of the Abitibi creditors looking to the trustee to sort out the company financial state and secure them some cash.

In the event the company files for bankruptcy protection, you can guarantee that the trustees will come looking for every nickel they can find. If the expropriation lawsuit was doubtful before, under a bankruptcy scenario, you can guarantee that all those creditors will want their cash.

Creditors that include the pensioners.

People from Newfoundland and Labrador.

Suing their own provincial government for their own money.

Wow.

So which side will the provincial government be on:

The pensioners…

or its own?

-srbp-

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