Silver Bay Logging will begin repaying its more than 100 creditors this year, but the 30-year-old company will operate on a much smaller scale as it regains viability, a company official said.
The logging company filed for Chapter 11 bankruptcy protection on Jan. 31, 2003. On Dec. 10, United States bankruptcy judge for the district of Alaska approved the company's reorganization plan, said Errol Champion, the general manager of the aviation division for the company.
Creditors for the company included several banks, a health insurance company, service providers in Southeast Alaska and some employees waiting for paychecks, Champion said.
"One by one, we're paying everybody," he said. "It would have been very easy for the owners of the company to say, 'All right, we're just locking everything up.' "
Last year, the company was able to log only part of the season. This year Silver Bay will operate its Wrangell sawmill for the entirety of the logging season starting in March, Champion said.
The company will employ 60 people to harvest about 35 million board feet of lumber this season to produce about 25 million board feet of saw logs this season, the Wrangell mill's final product, Champion said. The employees will work a single shift, five days a week.
As part of the reorganization plan, Silver Bay Logging will sell its marine division, several helicopters in its aviation division and other assets not essential to the company, Champion said.
The logging and transportation of timber in Silver Bay's operation this year will be handled by outside contractors, he said.
The U.S. Forest Service is happy to have another Alaska company as a buyer for timber from national forests in the state, said Chip Weber, acting director of forest management for the Alaska region of the Forest Service.
"From the standpoint of an agency that's working hard to have a viable economy for Southeast Alaska, somebody being able to reorganize and provide employment is a good thing," Weber said. "It means jobs that pay a reasonable wage for people who live there."
Silver Bay's Wrangell mill will be one of only three mills operating in Southeast Alaska this season, said Owen Graham, executive director of the Alaska Forest Association.
"On the one hand, this is a medium-sized mill," he said. "But on the other hand, it will be a huge improvement to the timber industry."
Viking Lumber on Prince of Wales Island and Pacific Log and Lumber in Ketchikan also will operate this season. Gateway Forest Products' mill in Ketchikan closed in 2001 after the company filed for bankruptcy.
"In my experience, it's pretty rare for somebody to work out of (bankruptcy protection)," said Graham. "I'm glad they were able to do it."
Depending on how much timber Silver Bay can harvest, its operations could help the Ketchikan Gateway Borough begin operating the veneer plant it bought after Gateway Forest Products filed for bankruptcy in 2001, Graham said.
The plant needs a minimum of 100 million board feet of timber to turn into veneer and the city hasn't had a source for the timber since it bought the plant, Graham said.
Christine Schmid can be reached at firstname.lastname@example.org.