Newfoundland and Labrador Premier Danny Williams doesn't expect the province to recover $35 million given to former AbitibiBowater employees told they were losing severance payments they were owed.
Premier Danny Williams announced Tuesday that the province is footing the bill for the workers' unpaid severance, which went into limbo when the company was given creditor protection.
The workers lost their jobs when AbitibiBowater closed the Grand-Falls Windsor mill at the end of March.
AbitibiBowater Inc. was granted bankruptcy protection in Canada on April 17, a day after a Delaware court granted the company's request for shelter under Chapter 11 of the U.S. bankruptcy code Thursday.
Williams said the payments will apply not only to unionized workers, but to widows and other workers who had their pensions cut, as well as loggers who weren't entitled to severance in the first place.
The Communications, Energy and Paperworkers union, which represents many of the the former workers, is fighting AbitibiBowater in court for the money.
"We're going to want to get every penny that this company owes every worker, and we're just going to pay it back to the government," said Rick Fudge, head of the union local that represents loggers.
If the union wins, it's expected to pay the province back, however Williams said it's probably unlikely that much of the money will be recovered from the court process.
"When it comes to the workers, unfortunately in these types of proceedings, they are the least secure to the creditors, which is terrible when you think that they give their lives to a company and they're way down the list on security because those who give security cover themselves off," he said.
Williams said the payments are justified because the former workers have spent decades contributing to the economy of central Newfoundland.
"They were going to be left high and dry — some of them with 39, 40 years of service. We felt that was wrong," he said.
The workers had been pushing for the deal for months, suggesting that it come out of the money the province owes AbitibiBowater for the expropriation of its assets.
The government introduced legislation in December that expropriated the company's timber and water resources in the province.