A company owned by the founders of clothing retailer Gap Inc. won preliminary approval Friday to take over bankrupt Pacific Lumber Co., which owns more than 200,000 acres of timberland along California's North Coast.
A federal bankruptcy judge in Corpus Christi, Texas, said in a ruling that he would approve a reorganization plan by Mendocino Redwood Co., but the Ukiah, Calif., company would have to make some changes to the plan.
Final approval of the takeover could be further delayed if creditors decide to appeal the ruling.
"This opinion is a positive step forward," said Mendocino Redwoods Chairman Sandy Dean, adding that his company planned to make the changes requested by Judge Richard Schmidt.
Mendocino Redwood, a 10-year-old company largely owned by Gap founders Don and Doris Fisher, owns and manages about 230,000 acres of timberland in Mendocino and Sonoma counties.
Mendocino Redwood was one of five groups that submitted plans to take control of Pacific Lumber after the Humboldt County firm filed for Chapter 11 bankruptcy protection in January 2007, saying it could no longer make a profit because of government logging restrictions.
Pacific Lumber is owned by Houston financier Charles Hurwitz and his Maxxam Corp., which acquired the Scotia, Calif., company in 1986.