PORTLAND (AP) – A judge ruled Wednesday that bankrupt Eastern Pulp and Paper Corp. can proceed with the sale of its mills in Lincoln and Brewer, ending fears the mills would be abandoned.

U.S. Bankruptcy Chief Judge James Haines accepted Paper Acquisition Corp.’s $8.5 million offer for the mills. He ruled after indicating he was prepared to work into the night to move on accepting the offer as the “stalking horse” bid.

The chief objection to the purchase offer by two Massachusetts investors came from one of Eastern Pulp’s major creditors, Corsair Special Situations Fund, which argued that its interests were being getting short shrift.

But the judge ruled that Corsair was adequately protected and would be receiving more money through the sale than through an abandonment, which would have resulted in nothing.

Corsair attorney Bruce Sleeper was concerned that his client would be getting about $800,000 less than the $3.3 million it claimed it was owed. He also objected to bidding procedures and raised questions about the potential buyer’s financial capacity.

But the judge suggested that disgruntled creditors were kidding themselves if they believed that scuttling the proposed sale would allow them to have access to the mills and sell off machinery and equipment to get a bigger payback.

Assistant Attorney General Dennis Harnish, representing the state Department of Environmental Protection, made it plain that the state lacked the funds to avert the environmental disaster that would take place if the mills were abandoned.

To protect public health and safety, Harnish said the state was prepared to file for liens on the real estate and equipment at the mills.

The only offer for the mills came from Satish Agrawal and Robb Osinski, whose stalking horse bid would set the stage for a court auction.

At stake in the lengthy court proceedings are a total of 750 jobs at a tissue making operation in Lincoln and a coated paper line in Brewer.

Agrawal, a former executive at Polaroid, has indicated that he hopes to introduce a line of digital papers at the company.

Eastern Pulp, with headquarters in Amherst, Mass., filed for Chapter 11 reorganization in September 2000. The judge converted the proceeding to Chapter 7 three weeks ago.