PACIFIC LUMBER IS ONE YEAR INTO BANKRUPTCY AND A SHIFT IS FINALLY MANIFESTING
January 1, 2008
Pacific Lumber Bankruptcy Update
The last lengthy update we sent you on the Pacific Lumber situation was covering their long-awaited reorganization plan, released publicly and submitted to the Texas bankruptcy court in late September. Our Oct. 2 update detailed their plans to sell their old growth for an exorbitant price tag to a non-existent buyer, sell another 22,000 acres for high-end luxury homes, retaining 181,000 acres of timberland for commercial logging by PL, with Maxxam still in the picture. Not surprising, but still boldly arrogant and delusional.
Response from creditors and Humboldt county was swift and dissenting, and the road to a different entity than Charles Hurwitz's Pacific Lumber managing the redwood forests has now been laid out by the Corpus Christi bankruptcy judge, finally. After court-ordered mediations failed in mid-December, the field was opened for alternative reorganization plans by creditors and other interested parties to be submitted to the court, ending the period of exclusivity by Pacific Lumber. It took Judge Schmidt a while to see the writing on the wall--that only "reorganization plans" that produced continued rivers of cash to Maxxam would be proffered by PL--but better now than never. Schmidt intends to fast track reorganization, setting a January 30, 2008 deadline for those alternative proposals, saying he intends to approve one plan or another by April.
Who will submit proposals for management of this debt-burdened but still operational company? The bondholders, who carry the $700 million debt collateralized by the standing timber, otherwise known as trees, for one. So-called "unsecured creditors", those owed money without collateral backing the debt include EPIC and the Steelworkers Union, owed legal fees from the Sustained Yield legal case they won, and they, along with others have been seriously exploring the possibility of an outcome that would benefit the community, the workers and the natural environment, that would include community-based management, working forests, and preservation of ecologically critical areas through land trusts and conservation easements.
The newest player is Mendocino Redwood Company (MRC), brought into the discussion by Marathon Asset Management, a creditor owed $160 million, secured by the mills and other assets. MRC last week expressed interest in investing $200 million, which would mean a break up of the company's assets. While many met MRC's interest favorably, since their operation is seen as "lite" industrial logging, it would not mean an end to destructive logging in Humboldt County. While MRC does have experience coming in on the heels of heavy liquidation logging, purchasing mostly cut-over land from Louisiana Pacific Co. in Mendocino a number of years ago, they have long been boycotted (through the Fisher family owner's GAP retail stores) for their unsustainable practices. They were able to get FSC (Forest Stewardship Council) certification, but contrary to popular belief, this "green" certification", while seen as the gold standard in sustainable practices, does not prohibit cutting of old growth, nor does it stop all clearcutting and herbicide use. MRC is known for all three.
What all this means is is that this is a process to be closely watched, monitored, while watching for those openings that let the community and scientific and activist voices in. It was through bold action on the part of the Humboldt County Supervisors, who do not have standing in the bankruptcy court, that Judge Schmidt finally saw the giant holes in PL's original proposals.
Stay tuned. The large lady still has a song to sing. Our friends at the Alliance for Sustainable Jobs and the Environment have posted on their website many of the legal documents, press clips from Humboldt area news outlets and other pertinent information related to the PL bankruptcy situation. Check it out. http://www.asje.org/PL_Bankruptcy.html