ANCHORAGE (AP) -- Gateway Forest Products filed for Chapter 11 bankruptcy protection Monday, several weeks after starting production.
The struggling Ketchikan company is seeking a $5 million loan from the Ketchikan Gateway Borough after having already received $7 million in government financing.
Gateway officials blamed the company's problems on the expense of building a veneer plant, start-up costs and depressed lumber prices.
''We had a short-term liquidity problem,'' spokesman Cliff Skillings said.
Chapter 11 bankruptcy protection will allow Gateway to continue to operate while reorganizing and securing longer-term financing, the company said.
Gateway also filed an emergency petition asking the court to allow it to pay the company's 130 full-time employees.
Gateway has accumulated $37.5 million in debt. Papers filed in federal bankruptcy court in Anchorage said several Ketchikan businesses are among the largest unsecured creditors.
The bankruptcy filing is the latest setback for Alaska's ailing timber industry, which has suffered mill closures, logging cutbacks and bargain-basement lumber prices in recent years.
Gateway promised to breathe life into the industry with a new plant that would peel and slice logs from the surrounding rain forest and turn them into chips that would be dried and glued together as an engineered building product in the Lower 48.
After months of delays, the company finally turned out its first shipment of green veneer in late January.
Gateway was born from the ruins of Ketchikan's defunct pulp mill, the city's largest private employer for four decades. It closed in March of 1997.
The veneer plant was the brainchild of former Ketchikan Pulp Co. managers who saw a niche for a facility that could do something with the region's abundance of low-quality logs that once were boiled into pulp because they were unsuitable for sawed lumber.
Peninsula Clarion ©2015. All Rights Reserved.