KETCHIKAN (AP) -- The Ketchikan Gateway Borough will continue investigating the bankruptcy of a local bowl manufacturer and will resist the Department of Agriculture's demand for a guaranteed loan repayment of $278,000.
The borough in 1998 help pay for the move of Alaska Forest Creations Inc. to Ketchikan by guaranteeing $300,000 of a $500,000 USDA rural development loan. The value-added wood manufacturer was one of Ketchikan's first attempts at switching from four decades of pulp production to a smaller-scale timber industry endorsed by environmentalists.
Alaska Forest Creations closed its doors in March 1999 after a few months of turning local hemlock into kitchenware. The company blamed the closure on a lack of raw materials, production problems and the pressure to repay its debt.
The owner, Anchorage resident Michael Ronchetti, filed for federal bankruptcy protection in August. Remaining assets were sold at auction.
Ketchikan Assemblyman George Lybrand initiated an investigation of the company's records and last month released an attorney's report of the findings and recommendations.
The report by Anchorage attorney Joseph Levesque said irregularities occurred and that the borough had grounds for refusing to pay.
The borough assembly Monday directed Borough Manager Georgianna Zimmerle to identify assembly members who promised Ronchetti support in obtaining the loan.
The assembly directed Zimmerle to request the USDA to forgive the loan and request payment from the company's shareholders.
Zimmerle also was directed to request money for any necessary legal action and to send Lavesque's investigative report, along with other relevant documents, to Alaska Sen. Ted Stevens.
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