Klukwan files for bankruptcy due to $7 million debt

The Southeast Alaska Native village corporation Klukwan Inc. filed for bankruptcy this week. But it plans on remaining in business.

Klukwan is an unincorporated village with about 100 residents about 20 miles from Haines. The village corporation has around 250 shareholders.

Klukwan Inc. filed a voluntary petition for what’s called Chapter 11 bankruptcy. That allows for reorganization, meaning the debtor usually proposes a plan to keep its business alive and pay creditors over time. The court could also determine how the debts will be settled.

Klukwan Inc. manager Ralph Strong said the filing stems from an approximately $7 million dollar debt with Travelers Insurance Company. Strong said Travelers was the bonding company for South Coast Construction in Ketchikan, a company owned by the corporation that closed in 2002.

Strong said the two companies were never able to come to agreement on how to settle the outstanding debt. But the main point of concern for Klukwan is that Travelers is trying to put a lien on the distribution it receives from its regional Native corporation, Sealaska. That, according to Strong, is not allowed under the Alaska Native Claims Settlement act.

So Klukwan filed for Chapter 11 to protect itself, he said.

Strong said the federal bankruptcy court will make a determination whether such a lien is allowable for collection against a Native corporation. He said that decision could impact every corporation formed under the Alaska Native Claims Settlement Act.

The bankruptcy filing lists all of Klukwan’s creditors. In addition to Travelers Insurance, they include the IRS, Sterling Savings Banks, the corporation’s own general income trust and Rosemarie Hotch. Hotch is a shareholder and board member who filed suit against the corporation last year for the way its trusts were managed and used.  An undisclosed settlement was reached on that case late last year.

Shareholders in 2011 approved a $12.6 million payout from the company’s general income trust. But Strong said neither the Hotch settlement nor the payout caused the bankruptcy filing.

The corporation sent a letter to shareholders this week notifying them of the bankruptcy filing.

Strong said the outcome in bankruptcy court could be good or bad for shareholders. But the situation, he said, quote, “can’t get any worse.”

Recent headlines

  • dollar bill money macro

    Per diems driving special session costs

    Lawmakers who represent areas outside Juneau receive $295 for each day of the special session. Juneau lawmakers receive $221.25 per day.
  • Caroline Hoover proudly pins an Alaska Territorial Guard medal on the front of her father's parka during an official discharge ceremony held Oct. 17 in Kipnuk, Alaska. David Martin is one of three surviving members of the Alaska Territorial Guard's Kipnuk unit. A total of 59 residents of Kipnuk, who volunteered to defend Alaska in the event of a Japanese invasion during World War II, were recognized during the ceremony. Kipnuk residents who served with the Alaska Territorial Guard from 1942-1947 were members of a U.S. Army component organized in response to attacks by the Japanese on Pearl Harbor. (Photo by Jerry Walton, Department of Military and Veterans Affairs cultural resource manager and native liaison/public domain/Wikimedia Commons)

    16 Alaska Territorial Guard vets to be honored in Anchorage

    Sixteen veterans of the Alaska Territorial Guard will be honored at a discharge ceremony today. Four of them are from Western Alaska.
  • Don Andrew Roguska looks out from an upstairs window of an historic Juneau house he bought in 2016 to restore. Zoning regulations have prevented him from rebuilding in the same style. (Photo by Jacob Resneck/KTOO)

    Juneau mulls relaxing zoning rules for historic houses

    The historic houses in Juneau and Douglas were predominately built by miners and fishermen long before today's zoning was put into place. That's prevented homeowners from restoring or rebuilding homes in these neighborhoods without running into conflict with the city's zoning laws -- a temporary fix may be on the way.
  • Young joins Afghanistan war skeptics in Congress

    Alaska U.S. Rep. Don Young wants to know why Americans are still fighting in Afghanistan. He has co-sponsored a bill that would end funding for the war in a year, unless the president and Congress affirm the need for it.
X