The federal Bankruptcy Court judge presiding over the Pacific Lumber Co.'s Chapter 11 process told the bitterly divided parties Tuesday to pick a mediator by Friday and present a unified plan within 30 days.
That order, issued by Judge Richard Schmidt in Corpus Christi, Texas, left unsettled the issue that had been the subject of a seven-hour hearing in his courtroom Tuesday: whether Pacific Lumber or its creditors should control the reorganization of the troubled company.
Pacific Lumber, which is ultimately controlled by Houston financier Charles Hurwitz's Maxxam Corp., filed for bankruptcy protection in January when it was unable to make payments on what was then $714 million in bonds secured by the company's timberland.
Under bankruptcy law, Pacific Lumber got the first shot at proposing a plan to reorganize the company and pay off its debts. It did so on Sept. 30, when it made a proposal that included selling 22,000 acres of its most valuable redwoods as 160-acre timber farms.
But the Humboldt County Board of Supervisors, which would have to approve housing permits so the owners of these tree farms could live there, earlier this month approved a move designed to prevent just that - a fact that Schmidt noted Tuesday.
"The county is so incensed, they passed a resolution (so) that you couldn't do this plan," the judge said, according to Dow Jones News.
Pacific Lumber has been a flash point for environmental protests ever since Hurwitz, with help from former junk bond king Michael Milken, acquired the company in a debt-leveraged takeover in 1986 and more than doubled its cutting of old-growth redwood trees.San Francisco Chronicle
