TACOMA, Wash. - Hardwood lumber giant Northwest Hardwoods has filed for Chapter 11 bankruptcy.
"On November 23, Northwest Hardwoods and certain of its affiliates took the next step in implementing its restructuring support agreement by filing voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware," the company wrote in a release. "All of the company's first day motions were approved by the court today on an interim basis, which enables the company to run operations, supply customers and pay vendors per the normal course of business.
"Significantly, the Bankruptcy Court authorized the Company to use over $22 million of available cash to pay all critical vendors and other service providers any pre-bankruptcy amounts owing as invoices for those amounts become due and owing."
The restructuring agreement, announced by the company on November 6, hands ownership to creditors in exchange for cutting debt by $270 million.
"Specifically, the agreement accomplishes several key objectives: 1) reduce the company's debt by $270 million 2) significantly reduces debt service obligations, thereby increasing cash flow available for re-investment in the business and 3) most importantly, accomplishes this without reducing employee pay or benefits and with no expected impairments to customers or vendors."
The trade war with China is a primary reason for the company's struggles. In 2019, it shut down sawmills in Washington and Virginia, blaming tariffs. The Washington shutdown resulted in 70 layoffs.
“Across our industry, the trade dispute has drastically decreased demand for U.S. produced hardwood,” Northwest Hardwoods CEO Nathan Jeppson said in a statement. “As China looks to other countries with less regulated and sustainable hardwood supplies to meet market demand, supply chains may be permanently disrupted.”
The tariffs were polarizing. Jeppson and other executives believe they've been disastrous for the U.S. economy. Others acknowledge they're hurting right now, but believe they're necessary long-term. 67 percent of Wisconsin manufacturing executives polled in 2019 said they support the tariffs even though tariffs are hurting their businesses.
Northwest Hardwoods has 28 locations, and says it's the nation's largest North American hardwood supplier. The company celebrated its 50th anniversary in 2017.
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