Essar Steel Algoma will resume monthly tax payments to the City of Sault Ste. Marie.
The judge presiding over the Companies’ Creditors Arrangement Act proceedings dismissed a motion from the city, calling for Essar to pay back almost $11 million in back taxes.
However, Justice Frank Newbould said he made the decision with the understanding Essar would resume paying $350,000 per month, totaling about $4 million a year.
"I think now we have to have some discussions with the company and see what their plans are on a going forward basis," said Christian Provenzano, Sault Ste. Marie mayor.
"This doesn't solve the challenge and it isn't all the money owing, so there is still a conversation that has to be had there."
In a media release, the city said the judge’s decision is being analyzed by its legal team.
Essar currently owes the city about $26 million in unpaid municipal taxes.
The steelmaker was granted protection back in November 2015 under Companies’ Creditors Arrangement Act proceedings.
The company has racked up about $11 million in unpaid taxes since the process began.
Provezano said the city will address the back taxes owed once the proceedings are completed.
"I think now we go into that conversation with the credibility of having shown that we're going to stand up for ourselves and we're going to do what we think is right."
Essar has been using Debitor In Possession (DIP) financing agreement in order to fund their operations.
A fourth extension of DIP financing will be sought later this month.
The DIP lenders are proposing an extension that runs until August 31, with an automatic extension until September 29, providing certain condition precedents are satisfied.
The motion calling for an extension will be heard by a judge in Toronto on May 23.
