   |
||
|
 |
Newsroom | |
 |
|||||||||||||||||||||||||||||||||||||
|
Pacific Lumber Bankruptcy Mediation Ends Without Agreement - Noteholders Seek To Submit Alternative Plan To Bankruptcy Court 12-18-07 For Immediate Release - Contact: December 18, 2007 EPIC December 18, 2007 Contact: Sam Johnston, Environmental Protection Information Center (EPIC) PACIFIC LUMBER BANKRUPTCY MEDIATION ENDS WITHOUT AGREEMENT NOTEHOLDERS SEEK TO SUBMIT ALTERNATIVE PLAN TO BANKRUPTCY COURT Corpus Christi, TX, December 18, 2007 -- Mediation negotiations between the bankrupt Pacific Lumber Company (PL) and its creditors have ended without any agreement for a plan to rescue the beleaguered company from bankruptcy. On November 26, 2007, Judge Richard S. Schmidt ordered the parties into mediation, stating his skepticism that an agreement could be reached but nonetheless ordering the parties to try. That effort failed on December 12 when the parties concluded the mediation. PL submitted a controversial plan in September to the bankruptcy court, proposing to develop and sell some 22,000 acres of its prime timberlands as "kingdom" properties in order to pay creditors. The creditors (both unsecured creditors and the "Noteholders") oppose the plan, arguing that it is based on unrealistic and speculative values of the property, as well as an infeasible expectation that such a plan can overcome legal and regulatory hurdles. The largest creditor in the bankruptcy is a group of Noteholders, whose $700+ million debt is secured by the Scotia Pacific (Scopac) timberlands. Scopac is a wholly-owned subsidiary of PL. The Noteholders have filed a motion to dispense with the hearing currently scheduled for January 14 - 16 to determine the value of the Scopac's timberlands. PL proposes a lengthy, expensive process of evaluating the value of its timberlands in the context of its bankruptcy proceedings, which the Noteholders argue is "unnecessarily and unreasonably time-consuming and expensive." The Noteholders' are also asking the Court to end the period of "exclusivity" in which a Debtor-in-Possession such as PL has the exclusive right to propose a plan of reorganization under Chapter 11 of the Bankruptcy Code. The Noteholders propose that they and the unsecured creditors be allowed to propose an alternative plan of reorganization and to stop the bleeding of collateral because of PL's intransigence. As the Noteholders point out, PL's proposal for a valuation hearing puts the entire risk on the Noteholders. PL is using the timber collateral belonging to the Noteholders to pay its expenses, while at the same time PL's parent company Maxxam, which gained millions of dollars from overcutting and the Headwaters Forest transaction, risks nothing. According to the Noteholders, PL's proposal transfers "$160 million of value from Scopac" to PL's major secured lender, and creates up to $350 million of new debt, "all for the benefit of old equity," or Maxxam. PL's proposal is yet another attempt to camouflage its self-inflicted demise. When Charles Hurwitz, Maxxam CEO, raided PL in the mid-80s, he stated, "He who has the gold rules," signaling his intent to clearcut all of the old growth to remove the economic value of the resource within 20 years. Because of this intensive logging, PL has squandered "the gold," yet continues to act as though it can "rule," regardless of the expense to its creditors and the citizens of Humboldt County. EPIC believes the best solution for the creditors, the company, and the resource base of Humboldt County is the removal of Hurwitz and his Maxxam companies from Humboldt County, so that responsible timber owners can assume the task of recovery and sustainable forestry for the benefit of the citizens, the environment, and the local economy. For this reason, PL's plan should be rejected, and the Noteholders and other creditors should be allowed to come forward with an effective reorganization strategy. The Noteholders' motions will be heard by Judge Schmidt on Friday, December 21, 2007. "`Maxxam out of Humboldt' is no longer a slogan," said Sam Johnston, Private Lands Campaigner for EPIC. "It is a dire necessity, and the sine qua non of any solution to a company that is flailing out of control and seeks to shuffle the harmful consequences of its mismanagement onto its creditors and the people of Humboldt County."  << Back to Press Release Archive | Latest Press Release | Newsroom Subscribe Get action alerts, updates, and other important news in your email inbox by signing up with your email address here: Learn more about events | See the BACHList FAQ |
|
|
|
|||||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||||||||
|
|
|
Bay Area Coalition for Headwaters (BACH) is a project of the Ecology Center. Website design facilitated by Trees Foundation. © BACH |
