Ideals and noble intentions don’t pay the bills.
That’s something we’ve seen over and over as companies with the best of intentions to do good while also doing well fail.
Toms Shoes, for example, the company that donates a pair of shoes for every pair it sells, avoided bankruptcy only by transferring ownership to its creditors when it could not pay back its loans.
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It’s not that having ideals guarantees failure, but good intentions and a mission to serve the public do not always translate to profitability. In Toms’ case, the company’s one-for-one gimmick got it a lot of media attention, but it also trapped the company in an expensive business model.
Shoes are an incredibly competitive industry and locking in expenses your rivals don’t have may not guarantee failure, but it cedes important ground to them. The challenge, of course, is finding a social mission that resonates deeply with customers or one that somehow gives you a business advantage.
Few people would argue that Restoration Forest Products has a noble mission, but that has not been enough for the company, which has filed for Chapter 11 bankruptcy protection.
Wildfires have been a huge problem in California and Arizona.
Image source: David McNew/Getty
Restoration Forest Products fights wildfires
Restoration Forest Products works with the U.S. Forest Service on a variety of contracts including service contracts and timber sales.
“RFOR also works collaboratively with the Four Forest Restoration Initiative, whose mandate is to restore forest health and working to meet the needs of all of the stakeholders including communities, state, federal, environmental, and business,” the company says on its website. “The U.S. Forest Service seeks to restore over 2.4 million acres of Arizona’s forest to a more natural state, thereby reducing wildfire risk.”
The company works to turn trees into lumber and other products used in homebuilding, in a way that’s good for the environment. The company also works to prevent wildfires, a massive problem in the western U.S.
“Restoration Forest Products is passionate about the vital work of forest restoration in order to help protect communities from catastrophic wildfires and post-wildfire flooding, improve wildlife habitats, conserve biodiversity, mitigate overgrowth, and restore our natural forest structure and function,” the company added.
Restoration Forest Products files Chapter 11 bankruptcy
Restoration Forest Products has filed a consensual prepackaged court-supervised process under Chapter 11 of the U.S. Bankruptcy Code, “which it expects to complete as expeditiously as possible,” according to the company.
Assuming the court approves the plan, RFOR will emerge from the Chapter 11 bankruptcy with Invesco,, a massive investment company operating in 26 countries, as its controlling owner. Invesco will take majority ownership while RFOR’s current equity partner, Lateral Investment Management, will retain a stake.
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Restoration Forest Products has received $95 million in additional financing from funds managed by Invesco.
“In connection with the additional financing, RFOR plans to complete a financial restructuring plan that will strengthen its balance sheet and substantially reduce the company’s debt,” the company said,
Along with the bankruptcy filing, RFOR has named Anthony Flagor as its new CEO.
“Flagor has 25 years of experience in sawmill operations, including plant and production management positions at Boise Cascade, Interfor, Roseburg Forest Products, Swanson Group, and Potlatch,” according to the company.
“Most recently, he served as region manager for the inland region at Boise Cascade, where he was responsible for operations across five mills in Idaho, Oregon and Washington, overseeing over 700 team members.”
Restoration Forest Products sells lumber and engineered wood products for use in construction. Demand for lumber has spiked periodically in recent years due to increases in home construction.
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