Updated: Judge clears Mendocino Redwood plan for Palco, appeal to follow
By John Driscoll
July 9, 2008
A U.S. Bankruptcy Court judge has signed an order confirming the Mendocino Redwood Co.’s plan to rebuild the Pacific Lumber Co., a deal that will likely close quickly barring a potential stay while major creditors appeal.
The landmark decision marks the beginning of the end of 18 months of battle over the stalwart but troubled Scotia company. Judge Richard Schmidt on Tuesday signed off on the plan by Mendocino and Palco creditor Marathon Structured Finance Fund, and worked to button up remaining issues. Creditors owed $714 million secured by Palco’s timberlands still have a chance to appeal, and Schmidt will hear arguments on Thursday on whether to stay his order while they seek that appeal from another court.
Schmidt suggested in his Corpus Christi, Texas courtroom that any stay he considers would likely require the timber noteholders to put up a bond, and on Thursday he may decide to grant a stay longer or shorter than 10 days. A notice of appeal must be filed by parties by the end of today.
“We’d like the opportunity to close at the first opportunity,” said Mendocino Redwood attorney Alan Brilliant. “We believe we have all the approvals we need and can close as quickly as possible.”
Under the plan, Mendocino Redwood would pay the noteholders $513.6 million for the timberlands. They would then tie together the Scotia sawmill and the timberlands, which it would manage according to Palco’s habitat conservation plan, which grew out of the 1999 Headwaters Forest deal.
Mendocino Redwood plans to reduce the amount of logging on the Palco property for the first 15 years, and end traditional clearcutting. Marathon would reorganize the town, and offer the houses there to employees of the new company formed from Palco.
“It’s a terrific and very positive step forward,” said Mendocino Redwood Chairman Sandy Dean in a phone interview.Posted in PALCO | Tagged HRC, MRC |