Ketchikan veneer plant wants cash from creditors

Posted: Monday, March 11, 2002

KETCHIKAN (AP) -- Lawyers for Gateway Forest Products want the Ketchikan Gateway Borough, Ketchikan Pulp Co. and Foothill Capital Corp. to provide $400,000 for attorney fees and other administrative expenses.

The money would come from cash the three parties could receive from Gateway's anticipated financial reorganization under Chapter 11 bankruptcy protection, according to a motion by Gateway bankruptcy attorney Spencer Sneed.

Gateway was formed in 1999 to purchase the Southeast Alaska assets of Ketchikan Pulp Co.. The company borrowed $7 million from the Ketchikan Gateway Borough to build a veneer mill. Construction cost overruns, delays and crashing lumber markets contributed to heavy losses in 2000.

Unable to pay its bills, Gateway filed for Chapter 11 protection from creditors in February 2001.

In April, the borough injected an additional $8 million into the company, hoping it would continue to provide jobs for 70 or more Ketchikan residents.

If U.S. Bankruptcy Judge Donald MacDonald agrees to the lawyer's request, the Dorsey and Whitney law firm would receive $207,000 for current and anticipated billings through April 20. Steve Hartung, Gateway's bankruptcy chief executive officer, would receive about $44,000, and $18,000 would go to pay Joan Travestino, the attorney representing unsecured creditors.

A further $101,000 would be paid as salary and benefits to eight full-time equivalent employees. The company's manager-owners are working for half pay, said Sneed. A few other employees, including some part-timers, perform administrative, some maintenance and security work.

Sneed wrote in his motion that the company expects a financial reorganization plan to take effect by April 20.

''This case is on the verge of smashing success or abysmal failure,'' he wrote.

Ketchikan Gateway Borough Attorney Scott Brandt-Erichsen said the borough would oppose the motion.

Subscribe to Peninsula Clarion

Trending this week:


© 2018. All Rights Reserved. | Contact Us