Pope & Talbot pulp sale dispute to go to discovery as judge tells sides to set timetable

By E. Janene Geiss

Wilmington, Del., Nov. 4 - The dispute over the sale of Pope & Talbot, Inc.'s pulp business will go to discovery after a Delaware bankruptcy court judge asked the two sides to set up a schedule for discovery requests and answer deadlines at a hearing on Tuesday.

The judge gave his instructions to the parties in response to a motion filed by the asset buyers seeking a return on the $10.53 million deposit because the sale was terminated.

"I'm getting the vibe that the documents produced will be voluminous and the number of depositions may be more than 10," U.S. Bankruptcy Court for the District of Delaware judge Christopher S. Sontchi said during the hearing.

Columbia Pulp and Paper Inc. and Columbia Pulp and Paper Ltd. filed the motion in July because the $105.29 million sale of assets was terminated and didn't close by the April 30 termination date established in the purchase agreement. Pulp business purchaser PT Pindo Deli Pulp & Paper Mills assigned all of its interests and rights related to the sale to Columbia Pulp entities on Feb. 14.

Columbia also said in court documents that Pope & Talbot did not satisfy several of the conditions set in the purchase agreement, resulting in a breach of representations, warranties, covenants and other agreements.

At the hearing on Tuesday, the attorney for Columbia Pulp requested time for discovery in order to prove its claims of default on the purchase agreement.

"We're looking for evidence to support our motion," Columbia Pulp's attorney Richard A. Barkasy of Schnader Harrison Segal & Lewis LLP, said in an interview after the brief hearing.

"It would allow parties additional time to continue to explore a settlement," Barkasy also told the judge.

In turn, an attorney for Ableco Finance LLC, secured lender to the debtor, told the court it objected to the motion to return the deposit, and also asked for time to prepare a case against the motion.

"We're hamstrung because we have some very generalized allegations here," Adam Harris told the judge, referring to the reasons given for the "alleged" breach in the agreement of sale.

In an objection to Columbia Pulp's motion, which was filed with the court on Oct. 1, Ableco said Columbia Pulp is not entitled to return of the deposit. "In fact, the purchaser is liable to the debtor's estate for damages well in excess of the amount of deposit," the objection read.

In the courtroom on Tuesday, both attorneys requested until at least January in order to collect documents, make depositions and even possibly depose clients in Indonesia involved in the Asia Pulp & Paper plant.

Sontchi ordered all of the parties to come up with a mutual agreeable timeline for discovery and status hearings. Future hearing dates will be set.

Pope & Talbot, a Portland, Ore.-based pulp and wood products company, filed for Chapter 11 bankruptcy on Nov. 19, 2007. It converted to a Chapter 7 case in May. The case number is 07-11738.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.