Bankruptcy judge backs reorganization of Pacific Lumber Co. – Plan calls for Mendocino Redwood Co., largely owned by founder of the Gap Inc., to operate 220,000 acres in Humboldt County
Bankruptcy judge backs reorganization of Pacific Lumber Co.
Plan calls for Mendocino Redwood Co., largely owned by founder of the Gap Inc., to operate 220,000 acres in Humboldt County.
By Tim Reiterman
Los Angeles Times
June 7, 2008
San Francisco — In an action hailed by environmentalists, a bankruptcy judge in Texas gave preliminary approval Friday to a plan by another timber company to reorganize financially troubled Pacific Lumber Co. and operate its 220,000 acres of Humboldt County land.
Deciding the fate of the 145-year-old California forestry giant, Judge Richard S. Schmidt selected the proposal by decade-old Mendocino Redwood Co., largely owned by the Fisher family that founded the Gap Inc. clothing empire.
Schmidt said he would confirm the nearly $600-million reorganization plan by Mendocino Redwood and Marathon Structured Finance Fund L.P. after three technical issues were worked out. He rejected a bondholder plan to secure more than $700 million in debt. The group could file an appeal after his selection is finalized.
Pacific Lumber filed for Chapter 11 protection in January 2007, saying that environmental restrictions imposed by the state prevented it from logging enough to make a profit.
Gov. Arnold Schwarzenegger issued a statement Friday praising the judge’s selection of Mendocino Redwood, which promised to import its forest practices to the Pacific Lumber land.
“It offers the best opportunity… to protect both the economic and environmental value of these assets,” the governor said.
Environmentalists said they hoped the plan would end the controversy and protests over logging practices that have dogged the company since it was acquired in 1986 by Houston-based Maxxam, headed by financier Charles Hurwitz.
“At long last, Maxxam is gone,” said Sam Johnston of the Environmental Protection Information Center. “This marks a new era for both the people and forests of Humboldt County.”
The company has sued the state, contending that California violated a $480-million deal under which the state and federal governments acquired 7,500 acres from Pacific Lumber to preserve ancient redwoods.
Mendocino Redwood Chairman Sandy Dean said he plans to sustainably log the lands and continue operating a sawmill. “This will allow the way of life and quality of life to be maintained,” he said.Posted in PALCO | Tagged HRC, MRC |