BY JONAS BEALS

Potomac Supply Corp. of Westmoreland County filed for Chapter 11 bankruptcy on Jan. 20. The move came about 10 days after the company announced a temporary shutdown of operations and a month after it ceased sawmill and planer operations, laying off 57 employees.

Prior to the layoffs, Potomac Supply was one of the largest employers in Westmoreland, providing jobs for more than 200 people.

Documents filed in United States Bankruptcy Court indicate that the company's board decided to pursue bankruptcy after struggling to obtaining financing amid a generally difficult downturn in the forest products industry.

Company President and Chief Executive Officer William T. Carden Jr. was named the authorized officer to guide the company through the Chapter 11 process.

Unlike Chapter 7 bank-ruptcies, which control corporate liquidation, Chapter 11 allows businesses to reorganize and continue operating throughout the process. It is not clear whether Potomac Supply will revive operations, sell the company or undergo a reorganization.

If the company does not resume operations, 168 people could lose their jobs.

Chief Operating Officer Richard Gouldin answered a call from The Free Lance-Star yesterday but said he did not have time to talk.

As required by law, the court filing contains a list of the creditors holding the 20 largest unsecured claims. Potomac Supply owes about $4.8 million to those 20 creditors, including about $900,000 to Osmose Wood Preserving of Griffin, Ga., and about $550,000 to both Flippo Lumber Corp. in Doswell and Potomac Xpress LLC of Kinsale.

In statements made earlier this month, Potomac Supply officials said the company would continue serving customers from existing inventories until supplies are depleted.

Potomac Supply Corp. was founded in 1948 and has manufacturing operations that make treated lumber, wood fuel pellets, wooden pallets, and treated fencing and decking.

Jonas Beals: 540/368-5036
Email: jbeals@freelancestar.com