Palco hearings grind on in bankruptcy court
By John Driscoll
July 2, 2008
Timber magnate Red Emmerson appeared in U.S. Bankruptcy Court in Corpus Christi hoping to testify about his proposal to rebuild the Pacific Lumber Co.’s mill, the latest of several unscheduled appearances.
But Sierra Pacific Industries President Emmerson was turned away by Judge Richard Schmidt, who said the issue set for Tuesday had nothing to do with the Scotia mill. Emmerson has yet to offer testimony in court, but has arrived in Corpus Christi on three other occasions unexpectedly, and has caused a stir by offering up a plan he says is better than one by Mendocino Redwood Co., which was approved by the court.
“We think you ought to be able to hear from Mr. Emmerson to know that they have a better plan for the mill,” said Bank of New York attorney Richard Strubeck, representing the creditors whose $714 million is secured by Palco’s 210,000 acres.
Schmidt said that while Emmerson is undoubtedly qualified to talk about sawmill operations, his testimony would not be relevant to the matter at hand. Schmidt on Tuesday listened to hours of exceedingly dull but vital testimony and examination regarding a claim by the timber noteholders for a purported loss to its collateral of around $200 million since the case started in Jan. 2007.
Mendocino and Marathon Structured Finance Fund have said that if the “superpriority” claim is allowed by the court, it would prevent them from closing their deal. They have argued that the noteholders’
claim is baseless, and that if anything the timberlands are worth more today than they were at the date the bankruptcy was filed. The noteholders have held that declining log prices and other factors have depleted the value of the lands.
Because of the potential upending of the Mendocino Redwood plan, Palco’s timber holding subsidiary Scotia Pacific submitted a motion for a hearing on holding a sale of the property in the event the confirmation of the deal falls through. Emmerson has submitted that it is interested in buying the Scotia mill and rebuilding it if that occurs.Posted in PALCO | Tagged HRC, MRC |