Letters + Opinion » The Town Dandy




There's no real news to report for the moment, so maybe now is a good time to catch our breaths and ponder a couple of the lingering questions relating to the Pacific LumberChapter 11 bankruptcy case, which was filed the week before last in Corpus Christi, Texas. As we wrote last week, there was a hearing on the case last Wednesday. What happened at the hearing? Basically, it's anyone's guess - there was no news coverage of the event, and the people involved generally don't seem to be in a talking mood.

First of all, as we mentioned last week, it's very possible that the Palco bankruptcy is going to end up bankrupting more than just Palco. Several small to mid-sized companies are out $100,000 or more. They're not going to be paid anytime soon, and maybe they'll never get paid at all. They don't want to talk on-the-record, because they're still hoping they can get paid by keeping things smooth with their creditor.

That hope may be in vain. One person who did speak to us last week was Rio Dell City Manager John Miller. Pacific Lumber owes Rio Dell $109,858, all of it relating to work performed by consultants who were contracted to study the annexation of Scotia into the town. Miller said that he was now concerned about whether the city will be able to recoup that cash. In any case, he said, it is his understanding that such decisions would now be made by the court, rather than by Pacific Lumber executives.

"I don't know how much control Palco has over the decision who to pay and when," he said. "We owe this money to contractors, we expect to pay them and we hope that Palco will be able to pay us as soon as they can."

Miller said that the bankruptcy court had recently convened a committee of the company's unsecured creditors (those that have no collateral for the money they are owed - in other words, most of the locals), and that they all participated in a getting-to-know-you type telephone conference call. Beyond that, he's somewhat out of the loop.

Which brings us to the key question. Corpus Christi? Why is the bankruptcy case being heard there and not here, where local reporters and interested parties would surely attend? Why, when this company does its business is California, is the bankruptcy hearing being held on Maxxam CEO Charles Hurwitz's home turf? The question answers itself, but there's a couple of interesting twists to the matter.

Just as Pacific Lumber consists of a number of subsidiary corporations, Pacific Lumber's Chapter 11 bankruptcy case is really multiple bankruptcy cases, all yoked together. Pacific Lumber itself filed for bankruptcy, but so did its subsidiary, Scotia Pacific. The former is a lumber company; the latter owns land and sells logs to the former. The smaller Palco subsidiaries also filed their own cases: Britt Lumber Co., Inc.; Scotia Inn, Inc.; Salmon Creek LLC; and, finally, Scotia Development LLC. Scotia Development was set up only last year, and was meant to serve as the primary vehicle through which the town of Scotia would be subdivided and sold.

It's curious, then, that when the bankruptcy cases were filed and yoked together, they were all yoked together under Scotia Development, rather than under Pacific Lumber or Scotia Pacific. Pacific Lumber is at the head of the corporate ladder; Scotia Pacific, technically, is the entity that has defaulted on its debt. Why were those bankruptcies wrapped into Scotia Development, rather than the reverse?

Well, perhaps because Pacific Lumber and Scotia Pacific, like most tax-averse corporations nationwide, are incorporated in the great state of Delaware (the closest stateside equivalent to the Cayman Islands). No connection to Texas, or at least not one strong enough to justify throwing a bankruptcy party there. Scotia Development, on the other hand - why, when that company was incorporated last year, it was incorporated in Texas.

Why? Well, it's enough to make veteran Maxxam critic Mark Lovelace, of the Humboldt Watershed Council, just a mite suspicious. "It's very clear that last summer, when they set that up - they had an eye toward bankruptcy even then," Lovelace said Monday.

Interesting theory. Can he prove it? Probably not. But here's a little nugget the Journal just uncovered. Though Maxxam itself is based in Houston, Scotia Development placed its offices in Corpus Christi. And, ta-da! Those offices are only five short blocks from the federal bankruptcy court now hearing the case, a pleasant stroll in that southern city's temperate climate.

The gambit (if gambit is what it is) is being challenged, according to one source familiar with the proceedings. The source, who wished not to be named, said that at Wednesday's hearing the California Attorney General's Office moved to have the case moved to the federal bankruptcy court in Northern California. If the motion is successful, it would mean that the bankruptcy case would be heard in San Francisco or Santa Rosa.

In a highly competitive media market such as our own, you search for unfilled niches and then you go out and fill them. Anything that can give you an edge over the competition. So it seems that the Eureka Reporter recently discovered that there was an unserved segment of the reading populace nostalgic for their 7th grade book report assignments, and hungry for more examples of the genre. Last week, Reporterreporter Carol Harrison bravely plugged that hole, filing a 500-word piece entitled "Pyramids of Giza: A marvel of Egyptian engineering."

Ah, the memories. It was all there - all the cribbed figures in units of miles and tons and acres and degrees of the compass, earnestly offering themselves up as a substitute for thought and meaning. The Britannica, chalk dust, kickball - temps perdu. It just about made us weep. But then the following paragraph cruelly whipped us out of our reverie and back into the present day:

Hauling construction materials into Humboldt County from Home Depot pales in comparison to moving granite blocks of 60 to 80 tons 500 miles or high-quality limestone blocks weighing as much as 15 tons each from eight miles away on the other side of the Nile River.

This is no doubt true, as far as it goes. But it doesn't go far enough. Yes, we all appreciate the subtle reminder that Eureka Reporter owner Rob Arkley, town billionaire, is graciously proposing to put an end to Humboldt County's back-breaking Home Depot shortage (how many has it killed so far?), but couldn't Harrison have further localized the story with more information relevant to her [cough]readers? If she really wanted to knock one out of the park, she should have thought about continuing thusly:

At the end of the workday, Pharoah provided entertainment for his peons in the form of board games, executions and brutal hand-to-hand death matches - *nothing to compare with a Kenny Rogers concert at the Arkley Center for the Performing Arts*, but nonetheless welcome at the end of a hard day's slave labor. Also, Pharoah generously provided funds for the maintenance of public gardens and other beautification projects, just as a certain local philanthropist helped build the Eureka Boardwalk, the new Eureka Zoo and the drive-thru Starbucks on Fifth Street.

However, some members of the rabble spurned these wondrous gifts and even went so far as to rebel. Led by Moses, a leftist radical, *the Richard Salzman of his time*, these ingrates plastered Giza with vile anti-Pharoah propaganda and generally made nuisances of themselves until, one day, happily, they wandered out into the desert and were never heard from again.

The End.

(Pharoah owns TransSinai Megapyramid LLC, which owns the Eureka Reporter.)

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