Yak Timber files for bankruptcy after its parent company, the village corporation, is sued for $13.3 million
Posted by Angela Denning, CoastAlaska | May 24, 2023
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This Yak Timber logging at Humpback Creek is controversial because the site is culturally and historically significant, according to the Yakutat Tlingit Tribe, Central Council of Tlingit and Haida Indian Tribes of Alaska, and Sealaska Corporation.
A timber company owned by Yakutat’s village corporation has filed for bankruptcy this month after a bank sued the corporation over $13 million in outstanding debts. It’s the latest chapter in the story of a contentious logging operation that many of the corporation’s shareholders didn’t support.
Listen to the audio story below.
Yak Timber filed for bankruptcy on May 11. In a letter to shareholders the next day, the village corporation, Yak-Tat Kwaan, said they filed “only after exhausting all efforts to negotiate a resolution” with the bank.
Yakutat’s tribal government, Yakutat Tlingit Tribe, says the lawsuit is further dividing a town that was already stressed — many residents didn’t agree with the logging operation in the first place. Andrew Gildersleeve is the Tribe’s executive director. He says above all, there is grief.
“The matter itself is almost like a broken piece of glass, with so many edges it’s impossible to pick up without getting cut,” Gildersleeve said. “There’s a shock of what’s happened to tribal lands and disbelief that there could be a claim of the size against an organization that is ultimately run by our friends, family and neighbors.”
Washington bank vs. Yak-Tat Kwaan
The lawsuit, brought by AgWestFarm Credit, alleges that Yak Timber owes the Washington-based bank about $13.3 million in unpaid loans. The suit was filed in U.S. District Court in Seattle on March 31.
“Where did all that money that they borrowed go?” asks shareholder Cindy Bremner. She’s also the former CEO of the corporation and Yakutat’s current mayor. She says shareholders have a lot of questions the corporation won’t answer. It’s straining relationships in the small town of 600.
“We live in a small town — we’re all related,” she said, “and it’s caused quite a divide between those on that board, and then pretty much the rest of the shareholders.”
The suit says the corporation hasn’t made payments since the middle of 2022. The bank is seeking repayment, interest, and attorney’s fees. It lists equipment along with timber, proceeds, and property as collateral.
In a letter to shareholders on April 7, corporation leadership said their board “is united in every possible effort to address the allegations.”
Shari Jensen, the corporation’s CEO said in a written statement that they had no comment for this story. But as recently as October, Jensen told CoastAlaska that paying back the loans wouldn’t be a problem after they sell Yak Timber’s logging equipment.
“Banks don’t lend money to broke companies, they just don’t,” Jensen said. “And, you know, we had a business plan. And they bought into it.”
A large barge is one of the assets the bank AgWestFarm Credit is seeking in its lawsuit against Yak Timber. (Photo/Defend Yakutat)
History — Yak-Tat Kwaan becomes a corporation
The Yak-Tat Kwaan corporation was formed in the early 70s after the Alaska Native Claims Settlement Act took effect. The federal law exchanged Indigenous land rights for money, divvying up the remaining land among a few hundred village corporations. Those corporations are charged with making a profit for their shareholders.
The Kwaan created its timber subsidiary in 2018 to harvest 21 million board feet of timber on its land. It logged about three-quarters of that, shipping nearly 4,000 log trucks worth of wood to China.
As Yak Timber pursued different logging projects, opposition grew among shareholders. Some wanted the corporation to seek other resource revenue such as carbon credits. Eventually, Yak Timber announced last fall that it would sell off its assets.
But the company continued to harvest timber at a place called Humpback Creek, which the local and regional tribal governments say is culturally and historically significant.
They, along with the regional corporation Sealaska, have requested Yak Timber stop logging there.
Shareholders take action in court
The corporation faces a lawsuit from shareholders as well. Some are worried that their land could be lost as collateral for their debt. Amanda Bremner is a cousin to the mayor.
“I am incredibly concerned not just for the risk to existing land, but for what this means for the future of our company and all of our shareholders,” she said.
Amanda Bremner and another shareholder, Jay Stevens, co-chair the Yaakwdáat Latínx’i Coalition that is seeking a change. Their lawsuit, filed on May 9 in Anchorage Superior Court, asks the court step in and force the corporation to hold an election for all nine seats on the board. Yak-Tat Kwaan hasn’t held an election in a couple of years, which led to a state fine.
Yak-Tat Kwaan shareholder, Amanda Bremner poses with her son. She and another shareholder, Jay Stevens, co-chair the Yaakwdáat Latínx’i Coalition, which is seeking a change. They are taking the corporation to court, demanding a board election.
Amanda Bremner says taking the corporation to court was a difficult decision, but many shareholders share her goals.
“To see our corporation flourish and thrive and be successful and ethical and rooted in Indigenous value and to have business practices reflect that,” she said.
The loaning bank will not comment. Seattle-based law firm CAIRNCROSS HEMPELMANN is representing the bank. In an email, they said their client did not want to comment.
In a separate court filing, April 7, the bank seeks to repossess a tug and barge they loaned Yak Timber for $3.3 million in January of 2022. Later, on May 5, they asked the court to ban the corporation from moving the barge, saying it was uninsured. The corporation has disputed this and filed its own motions.
Yak Timber has its own lawsuit playing out. It filed a suit November 18 accusing Bethel Environmental Solutions, an Alaska Native-owned environmental consulting firm, of owing them $443,912 for charter services.