Pacific Lumber gets court OK for sale of redwood logs to parent

By Rebecca Melvin

New York, Jan. 8 - Pacific Lumber Co.'s request to sell $2 million in redwood logs to parent Maxxam Inc. was approved, subject to some qualifications, according to a Tuesday filing with the U.S. Bankruptcy Court for the Southern District of Texas.

The court approved the sales agreement subject to some qualifications about possible future objections and some notice provisions.

Any notices required to be provided under the purchase agreement will be contemporaneously provided to counsel for the unsecured creditors' committee, Marathon Structured Finance Fund LP and the indentured trustee, the filing stated.

According to the emergency motion, Pacific Lumber said Maxxam has agreed to buy logs to fund non-recurring reorganization expenses and to provide liquidity to Pacific Lumber as needed.

Redwood logs are abundant because of the season and a construction slowdown, but the company is still funding reorganization fees and expenses, which are only expected to increase in light of an expected contested confirmation involving at least three separate Chapter 11 plans, the motion said.

A final hearing to approve any further transactions beyond the current purchase agreement was scheduled for Jan. 15. Objections must be filed by Jan. 11.

Pacific Lumber, a Scotia, Calif.-based producer of redwood lumber and an indirect wholly owned subsidiary of Maxxam Inc., filed for bankruptcy on Jan. 18, 2007. Its Chapter 11 case number is 07-20027.

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