A logging company owned by the Yakutat village corporation filed for bankruptcy this month after a bank sued the corporation over more than $13 million in outstanding debts. It is the latest chapter in the story of a controversial logging operation that many of the corporation’s shareholders did not support.
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.
The Yakutat tribal government, the Yakutat Tlingit Tribe, says the lawsuit is further dividing an already stressed village: many residents disagreed with the logging operation in the first place. Andrew Gildersleeve is the chief executive of the Tribe. He says that above all, there is pain.
“The thing itself is almost like a piece of broken glass, with so many edges that it’s impossible to pick it up without cutting yourself,” Gildersleeve said. “There is shock at what happened to tribal lands and disbelief that there could be a claim of that size against an organization that is ultimately run by our friends, family and neighbors.”
Bank of Washington vs. Yak-Tat Kwaan
The lawsuit, filed by AgWestFarm Credit, alleges that Yak Timber owes the Washington-based bank about $13.3 million in unpaid loans. The lawsuit was filed in the US District Court in Seattle on March 31.
“Where did all that money they borrowed go?” asks shareholder Cindy Bremner. She is also the former CEO of the corporation and the current mayor of Yakutat. She says shareholders have a lot of questions the corporation won’t answer. She is straining relations in the small town of 600.
“We live in a small town, we’re all related,” he said, “and it’s caused a big divide between those on that board, and then pretty much the rest of the shareholders.”
The lawsuit says the corporation has made no payments since mid-2022. The bank is seeking reimbursement, interest and attorneys’ fees. List equipment along with lumber, profits, and property as collateral.
In an April 7 letter to shareholders, the corporation’s leaders said its board “is united in every possible effort to address the allegations.”
Shari Jensen, the corporation’s chief executive, said in a written statement that they had no comment for this story. But as recently as October, Jensen told CoastAlaska that repaying the loans wouldn’t be a problem after they sold Yak Timber’s logging equipment.
“Banks don’t lend money to bankrupt companies, they just don’t,” Jensen said. “And, you know, we had a business plan. And they bought it.”
A controversial project
Yak-Tat Kwaan Corporation was formed in the early 1970s after the Alaska Native Claims Settlement Act went into effect. Federal law exchanged Indian land rights for money, dividing the remaining land among a few hundred village corporations. Those corporations are charged with generating profits for their shareholders.
Kwaan created its timber subsidiary in 2018 to harvest 21 million board feet of timber from its land. He accounted for about three-quarters of that, sending nearly 4,000 truckloads of logs 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 its assets.
But the company continued to harvest timber at a place called Humpback Creek, which local and regional tribal governments say has cultural and historical significance.
They, along with the regional Sealaska corporation, have petitioned Yak Timber to stop logging there.
Shareholders take legal action
The corporation is also facing a shareholder lawsuit. Some worry that their land could be lost as security for their debt. Amanda Bremner is the mayor’s cousin.
“I am incredibly concerned not only about the risk to the existing land, but 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 Latinx’i Coalition that seeks change. His lawsuit, filed May 9 in Anchorage Superior Court, requests that the court intervene and compel the corporation to hold an election for all nine board seats. Yak-Tat Kwaan hasn’t held an election in a couple of years, drawing a state fine.
Amanda Bremner says taking the corporation to court was a difficult decision, but many shareholders share her goals.
“Seeing our corporation flourish and prosper and be successful, ethical and rooted in indigenous value and have business practices reflect that,” he said.
The Seattle-based law firm Cairncross and Hempelmann represents the bank. In an email, they said their client did not want to comment.
In a separate court filing on April 7, the bank seeks to repossess a tugboat and barge that it loaned to Yak Timber for $3.3 million in January 2022. Later, on May 5, they asked the court to bar the corporation moved the barge, saying it was not insured. The corporation has disputed this and filed its own motions.
Yak Timber has its own lawsuit on the line. He filed a lawsuit Nov. 18 accusing Bethel Environmental Solutions, an Alaska Native-owned environmental consulting firm, of owing them $443,912 for charter services.
