Federal Appeals Court Awards $29 million to Pacific Lumber Creditors
Editor's note: This court ruling does not overturn the sale of Pacific Lumber's 200,000 acres to the family that owns the Gap stores and Mendocino Redwood Company, who have promised to end the practice of clear-cutting. It does, however, award a little more money to the former owners.
5th circuit fed appeals court awards $29.7 million to Palco noteholders
"Being satisfied with our appellate jurisdiction, we have concluded that the bankruptcy court undervalued the Noteholders' priority administrative § 507(b) claim by $29.7 million. The court erred in not crediting their interest with timber sales proceeds that were received during the bankruptcy, on which they had a lien and priority interest arising from the court's many cash collateral orders. To deprive the Noteholders of this amount would undermine a fundamental protection for secured parties whose collateral is used by the debtor during its reorganization efforts.
The judgment of the district court is VACATED, and the case is REMANDED with instructions to enter judgment for the Noteholders for a $29.7 million administrative priority claim against the reorganized debtor.
VACATED and REMANDED with Instructions."