Pacific Lumber Gets Itself Out of $1 Billion Federal, State Lawsuit over Fraud; Maxxam and Charles Hurwitz Remain as Defendants
WASHINGTON (AP) - Pacific Lumber Co. has reached a major settlement in its bankruptcy case allowing it to walk away from two lawsuits demanding $1 billion in damages for allegedly defrauding the state of
The settlement, which requires court approval, would wipe out $1 billion in potential claims that were threatening Pacific Lumber's Chapter 11 reorganization. The deal was made public in documents filed Friday with the U.S. Bankruptcy Court in
The lawsuits stem from a 1999 logging pact Pacific Lumber company negotiated with
While the claims against Pacific Lumber will be dropped, the two lawsuits -- one in a
An attorney for the plaintiffs declined to comment on Monday. A spokesman for Maxxam could not be reached for comment.
Pacific Lumber is asking the court to sign off on the settlement, saying it eliminates costly litigation that threatened its bankruptcy case.
The company, based in Scotia, Calif., said in court papers that even if the plaintiffs were "modestly successful" in asserting their claims, a claim for any amount "could prevent the feasibility of any Chapter 11 plan and thereby doom" the company's reorganization.
Under the settlement, the claims filed against Pacific Lumber will be resolved for $1. Pacific Lumber will eventually be dismissed from the state and federal lawsuits, according to court documents.
Pacific Lumber, which owns more than 200,000 acres of timberlands in northern
In 1999, Pacific Lumber and Maxxam finalized the so-called Headwaters agreement with
Richard Wilson, the former director of the California Department of Forestry and Fire Protection, and Chris Maranto, another forestry official, sued on behalf of the state and federal government, claiming Pacific Lumber and Maxxam used fabricated data to win approval of the deal.