OTTAWA - Troubled wood flooring and forestry firm Sino-Forest received approval by a Canadian court for a bankruptcy filing Friday. Sino-Forest, which said it hopes to sell its vertically-integrated operations, including forestry, saw mills and floor manufacturing.
With most its operations in China, the wood products company has been operating under a cloud since a report by investment firm Muddy Waters last year questioned the reliability of its financial reporting. Its trading has been suspended on the Toronto Stock Exchange since last year as the Ontario Securities Commission investigated.
Sino-Forest also launched a $4 billion anti-defamation suit against Muddy Waters and the author of the report, Carson Block. The report questioned the Sino-Forest's balance sheet evaluations of its forest lands, since it does not hold clear title to some parcels.
Sino-Forest has been targeted by shareholder lawsuits in the U.S. and Canada. When it defaulted on bond dividend payments in December, the wood flooring firm's largest shareholder, Richard Chandler of New Zealand, called for the board to resign.
The engineered wood flooring maker's CEO Allan Chan quit in August amid a continuing investigation by the Ontario Securities Commission, which suspended trading in Sino-Forest stock. The stock value plunged 50 percent. Sino-Forest, which manufactures flooring in China from its own plantations, had to delay release of its quarterly results and initiate an outside investigation.
U.S. investment firm Paulson & Co. recorded a $500 million loss on Sino-Forest holdings last year, and were sued in February by Hugh Culverhouse in U.S. District Court for the Southern District of Florida.
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