Sino-Forest Throws in the Towel

The Chinese timber grower Sino-Forest Corp. (AMEX:TRE) said Friday it plans to file for bankruptcy protection in Ontario Superior Court under the Companies’ Creditors Arrangement Act.

The Hong Kong and Mississauga, Ontario based company is looking at either a sale of the company or a restructuring under which note holders would basically gain all of its assets.

“We believe the full value of our assets will only be achieved if we are able to continue operating the business, and repair and preserve relationships with our customers and suppliers,” CEO Judson Martin said in a statement.

Sino-Forest was accused June 2 of overstating earnings by Muddy Waters LLC research firm and since has lost about $3.3 billion. The shares were suspended in August, and the company’s co-founder stepped down as CEO.

The following eight-month investigation directed by an independent committee of Sino-Forest cost more than $50 million, and the January report said Sino-Forest may not be able to disprove some of the research firm’s allegations, as the information may not exist or be retrievable.

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