When the entitlements of property clash
Quote of note:
The logging permits sought by the company are particularly controversial because dozens of local residents contend that for years, they have been subjected to flooding caused by Pacific Lumber's logging. The residents say that as rivers and streams fill with silt from freshly logged hillsides, homes and belongings have been damaged, wells have been fouled and sediment has piled up in pastures and orchards. Some homeowners say rising waters have stranded them during severe rainstorms.
Bankruptcy Threat With an Edge
Lumber firm says environmental safeguards are at risk if it can't cut more trees.
By Tim Reiterman
Times Staff Writer
January 25, 2005
SACRAMENTO Timber giant Pacific Lumber Co. has told the Schwarzenegger administration that unless it is allowed to cut more trees, the firm may file for bankruptcy, which it says would likely terminate environmental safeguards promised as part of a $480-million deal struck more than five years ago.
The federal and state governments paid the company that money to protect several thousand of acres of ancient redwoods under a 1999 agreement preserving the Headwaters Forest in Humboldt County.
But now Pacific Lumber, owned by Houston-based Maxxam Inc., says it faces financial ruin because it is starting to run out of marketable timber. Unless the state grants permission for logging on a dozen areas of flood-prone watersheds the company still owns near Eureka, it says, it will have to file for bankruptcy, closing mills and laying off workers.
In the event of bankruptcy, the company asserts, the rights of Pacific Lumber's bondholders would take precedence over the provisions of the Headwaters deal. Those creditors, who hold the timber as collateral, could waive the logging restrictions.
The additional logging would not involve cutting trees in the 7,000-acre Headwaters Reserve, which the company sold to the state and federal governments as part of the 1999 deal. Instead, Pacific Lumber seeks to increase allowable logging on the 200,000 acres it still owns.
