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Tseshaht out $300,000 in Pallan bankruptcy
The Tseshaht First Nation is on the hook after a Campbell River logging company that owed it money declared bankruptcy.
Campbell River-based logging company Pallan Timber Group announced last fall that it was bankrupting at least one of its sub-companies: Howe Sound Forest Products.
The Pallans are involved in logging, lumber sales, real estate and other ventures.
A first meeting of creditors took place Dec. 11 in Campbell River. In a copy of the list of creditors, one of the unsecured creditors is CISAA Forestry LLP which is operated by the Tseshaht First Nation. The company is shown as being owed $306,588.
The Tseshaht are the third largest creditor behind the Canadian Imperial bank of Commerce and Island Timberlands respectively.
Pallan owes more that $15 million to its creditors: $711,000 to secured creditors; the remainder to unsecured. The Tseshaht is listed as an unsecured creditor.
Several companies were owed thousands which will likely not be recovered. "The company got into trouble…we got big too quick…and the bank refused our offer," Derick Pallan said. "There's no more money."
Repeated requests for interviews with Tseshaht First Nation Chief Councillor Hugh Braker weren’t returned.
Senior managers warned tribal officials not to do business with Pallan, former Tseshaht CEO Cindy Stern said.
Stern has more than 30 years of experience in the forest industry. She also served as CEO of Tseshaht for more than five years.
According to Stern, former forestry manager Rob Hunter drew up a request for proposals for some forestry work. The RFP was initially awarded to TimberWest, but the company couldn’t fulfill all of the terms of the contract. Pallan was recommended to do the work and Stern advised against it.
When asked who she advised not to go with Pallan, Stern said “You’ll have to ask the administration that question.”
Hunter left Tseshaht in May. Stern left in June. The final decision to go with Pallan was made later.
“I’m not comfortable commenting about decisions that were made after I left,” Stern said.
Pallan initially tried to restructure the company last fall, even appointing accounting firm KPMG to act as a receiver, but the plan broke down and subsequent bankruptcy proceedings started.
— With files from the Campbell River Mirror