the town dandy / By Hank Sims

Payday

(April 3, 2008)  The vote is in! Result? It’s Mendocino Redwood Company, by a mile!

The only major voting bloc in the Pacific Lumber bankruptcy case that doesn’t have its own horse in the running is the group of “unsecured creditors,” the mostly small-fry type folks who did business with the company, or successfully sued it. (The Journal¬†is one such creditor, to the tune of $85.)

Turns out 98 percent of these creditors voted for the plan being promulgated by Marathon Capital, one of the company’s big-time creditors, and its ally, the Mendocino Redwood Company. In addition, that 98 percent — a simple head-count — represents 99 percent of the total cash claims against the company from the unsecureds. A landslide and not surprising, given that a broad swatch of Humboldt County — from nouveau hippie to old-school trucker — has gotten behind Mendo Redwoods as the most stable, sustainable plan for both the economy and the environment.

The unsecureds rejected the other plans — one that would put the lands up for auction, and Palco’s own housing development-based plans — by nearly as wide a margin. Everyone else, the high-stakes players in the game, voted for their own plans and against the others’.

One curious outcome of this is that Mendocino Redwoods is the only serious player left at the table that has any sort of plan for the town of Scotia and the Palco mill. If the other major player in the game — the owners of bonds secured against Palco’s timber holdings — get their way, the land would go up for auction and the mill would be left to hang.

Though Palco itself had plans for the town, the fact that they could get any of the other parties in the case to vote for them means that they’re all but dead. On Tuesday, several of the parties asked the Judge Richard Schmidt to basically declare them so. The cautious Schmidt declined, saying that anything could happen between then and now. But he did agree with the basic premise.

“At this point the plan is not confirmable,” Schmidt announced to the courtroom. “Do we all know that?”

One Maxxam plan that’s still alive, as far as we can tell: The Scotia Pacific “cramdown plan,” in which Maxxam keeps a prime chunk of Humboldt County acreage to develop or hold hostage, leaving the dogs to fight over the rest of the company. No one voted for this either, but the company is still hoping that the judge might yet choose to “cram it down” — that’s an actual legal term — on everyone else.

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