LISBON – Bank of America has forced the liquidation of the Celotex plant here, leaving 50 people out of work and unsure about future medical benefits.

Known locally as Knight-Celotex, the Illinois-based corporation was forced into Chapter 7 liquidation Thursday morning. The Lisbon Falls plant closed sometime Wednesday, according to local sources.

Celotex spokeswoman Laura Peet said Bank of America representatives met with company CEO Jim Knight on Tuesday and indicated the bank would work with Celotex if Knight resigned, which he did.

An interim CEO was appointed, and a new plan and a new budget presented, but Bank of America would not agree to continued operation of Celotex under those terms, Peet said, and the U.S. Bankruptcy Court appointed a trustee to oversee the corporation’s liquidation.

Calling the order to liquidate “heartbreaking,” Peet said, “We are hoping for a sale quickly. Celotex is a fabulous brand. Admiral Byrd used Celotex (products) during his excursion to the North Pole a century ago.”

In addition to the plant in Lisbon Falls, the company had plants in Sunbury, Pa., Marrero, La., and Danville, Va., and had employed a total of 250 people to manufacture eco-friendly specialty fiberboard with high-insulating and sound-proofing qualities.

The products made in Maine were constructed of up to 99 percent organic material, primarily composed of post-industrial, recycled Maine wood waste. By substituting a vegetable starch for formaldehyde, the products met Green Building Initiative standards, which the company promoted heavily as “Green Building.”

Last April, Knight-Celotex filed for Chapter 11 protection under the U.S. Bankruptcy Code after its accounts were frozen by Bank of America. That allowed the company to continue operations and honor employee wage and benefit programs. Considered the world’s largest fiberboard manufacturer, the company took voluntary steps in 2008 to ensure the viability of its operations, including a brief shutdown at the Maine plant last summer.

When the Lisbon Falls plant reopened in September, after about a month of not operating, less than half of its workers were invited to return to work. The company, seeking to improve efficiency and reduce rising energy costs, decided to make only one product line at the Route 196 facility.

Before its temporary closure, the plant had been the town’s third-largest employer. When it reopened, it focused on making Conflex, a concrete expansion board used in road construction.

Charles Micoleau, corporate general counsel, explained at the time that Conflex was chosen because it had been the most profitable product made at the Lisbon Falls plant.

Months before the shutdown, the company and the machinists union were in dispute, with the company challenging an April 30, 2008, vote by its workers to join a chapter of the International Association of Machinists.

In 2004, the Knight-Celotex plant was certified as a Pine Tree Zone business, a classification that provided the company with incentives for job growth, with the understanding it would become an active partner with economic development and business community groups in Androscoggin County.

Knight-Celotex had acquired the 35-acre manufacturing site from Masonite Corp. in 2003. Originally built as a lumber mill in 1889, it was converted to a paper mill in 1900 and finally a fiberboard plant in 1934, and operated for years by U.S. Gypsum.

The plant was heavily damaged by fire in 2004 when a drying machine malfunctioned, and had a minor kiln fire in May.

Sun Journal editor Judith Meyer contributed to this report.