It's About All Over...Appellate court rules in favor of Mendocino Redwood Co.
Published: Jul 24 2008
An appeals court has denied a creditors group’s motion for a stay in the Pacific Lumber Co. bankruptcy case to prevent a court-approved restructuring plan from moving forward.
Just hours ahead of a deadline for a temporary stay already in place, the U.S. Court of Appeals for the Fifth Circuit ruled Thursday to deny a motion by the Timber Noteholders for a stay pending appeal to allow it to review rulings made by judge Richard Schmidt.
Noteholder attorneys argued they were denied their right to auction off PALCO’s lands they held as collateral to recoup the most money they are owed, as well as were owed as much as $200 million as part of a superpriority claim resulting from a devaluation of the timberlands during the nearly 2-year bankruptcy proceeding.
Although the Fifth Circuit still may still hear the appeal, it's not certain when Mendocino Redwood Co. and its partner Marathon Structured Finance can move forward with its reorganization plan approved earlier this month that allows them to take over commercial timber operations of Scotia Pacific’s 210,000 acres of timberlands and the town of Scotia, it’s mill and other assets.
MRC officials said they would be moving quickly to implement their plan when all legal hurdles were cleared.
Timber Noteholder lawyers argued that a stay pending an appeal was necessary because if MRC implemented its plan it would effectively make their appeal moot.
MRC officals were not immediately available for comment.