Former California Gov. Pete Wilson said he will lead the bankrupt Scotia Pacific Co. through its reorganization, if the federal judge overseeing the bankruptcy proceeding approves the reorganization plan submitted by the company’s largest creditor.

Consultants for the Indenture Trustee representing the Timber Noteholder group, which is owed nearly $800 million by Pacific Lumber Co.’s subsidiary SCOPAC, announced Thursday that Wilson is the best pick to implement its reorganization plan and to strike a balance among the competing interests.

The Indenture Trustee’s reorganization plan, which mainly addresses SCOPAC and aims to recover its money through a sale of the company’s 210,000 acres of timberlands, is one of five reorganization plans competing for confirmation that is scheduled to be concluded
in Corpus Christi, Texas next month.

Wilson served as California’s governor from 1991 to 1998, and is now a principal of Bingham Consulting Group — a subsidiary of the law firm Bingham McCutchen that represents the Noteholders — and was selected to lead the reorganization based on his knowledge of
the North Coast and his history with SCOPAC.

Wilson stated in a news release Thursday that he’s been involved in timber issues in the North Coast for decades and worked closely with Sen. Dianne Feinstein, as well as federal regulators, to protect and preserve the Headwaters Forest that lead to the historic
Headwaters Agreement.

“A key component of that agreement was the habitat conservation plan, the first time we pushed for a regulatory solution on this scale to preserve the conservation value of the timberlands while guaranteeing sustainable timber jobs in this region,” Wilson said in the
release.

Wilson said he is committed to rebuilding SCOPAC in accordance with the five principles outlined by Gov. Arnold Schwarzenegger in a previous letter to the bankruptcy court, including ensuring the timberlands are managed in compliance of all local, state and federal
laws, harvesting is done at sustainable levels, preserving as many local jobs as possible.

Sean Walsh, a spokesperson for Bingham Consulting Group, said in a phone interview Thursday that Wilson is “a natural” to serve in the role he described as chairman of the board of the committee that will implement the reorganization plan.

“From our perspective, (Wilson) knows the issues forward and backwards,” Walsh said.

PALCO officials agree Wilson brings considerable big-name recognition with his late entry into the more than one-year-old bankruptcy proceeding as the plan confirmation nears.

Frank Bacik, PALCO vice president and general counsel, said he doesn’t question Wilson’s qualifications, but added that he wasn’t California’s governor when the Headwaters Agreement was signed in 1999.

“If they want to put someone famous in charge of the sale, that is their choice,” Bacik said. “But it hasn’t struck me that their plan is aimed at managing a timber company and mostly looks to liquidate the timberlands.”

PALCO breach of contract lawsuit against state moves forward

Wilson’s role in the bankruptcy was announced Wednesday during a bankruptcy hearing to discuss PALCO’s lawsuit pending against the state of California, which could be a financial boon to whoever ends up with control of the company.

PALCO attorneys argued unsuccessfully to prevent the court from making it share with the state the results of its consultant’s report that places the potential value of the litigation in the hundreds of millions if a judge rules in the company’s favor.

PALCO filed its suit against California in Superior Court in Fresno in December 2006 to recover damages the company said it incurred when the state breached the Headwaters Agreement by restricting the company’s ability to harvest its forests and remain economically
viable.

Bacik said attorneys for the state filed a motion to dismiss the case, but the judge issued a tentative ruling earlier this month that will allow the case to move forward with three of the five issues PALCO filed in the suit.

“Our causes of actions survived, mostly intact,” Bacik said.

During the hearing Wednesday, the Indenture Trustee announced Wilson would act as litigation trustee to oversee the lawsuit if the Noteholders acquired the company in the bankruptcy.

Walsh said if the Indenture Trustee’s plan is approved, one of the first things Wilson would do is take a look at the lawsuit to determine if it had merit.

While PALCO’s lawsuit doesn’t name specific monetary damages, Bacik said approximately $500 million is consistent with the consultant’s estimates.