Honduras Averts $200M Legal Sawmill Albatross

MANHATTAN (CN) - In a big turn for a nearly two-decade old case, the Second Circuit found "no competent evidence" that Honduras assumed liability for a more-than $200 million judgment against the private corporation Corfino.

Short for Corporación Forestal y Industrial de Olancho, Corfino owned a sawmill in Honduras that the republic once dominated with a 98 percent ownership.

Cortez Byrd, a U.S. citizen tapped inspect the Honduras sawmill for a 1995 lease to a man in Mississippi, eventually struck a deal in which that Mississippi man assigned his sawmill lease to Byrd's company, Simmons Lumber.

The arrangement didn't last long, however, and Byrd filed suit in Mississippi in 1997.

When a federal judge slapped Corfino with a $188.3 million judgment in 2003, Byrd and Simmons Lumber tried to get Honduras to pay up.

The Latin American-nation finally extricated itself from the international legal wrangle on Monday as the Second Circuit affirmed a decision to vacate the finding that Honduras is a "successor-in-interest" to Corfino.

"Plaintiffs offer no competent evidence that Honduras ever expressly or implicitly assumed Corfino's debts," the order states. "They point to a Honduran statute stating that the government assumed the liability of Corporation Hondureña de Desarrolla Forestal ('Cohdefor'), but they never show that Cohdefor in turn assumed the liability of Corfino."

Attorneys for Hondoras at the Minneapolis, Minn.-based law firm Dorsey & Whitney noted that the June 1 summary order fell only 10 days after oral arguments.

The Second Circuit's order "shut the door" on attempts to hold Honduras liable for the judgment, according to the firm's press release today.

"The federal courts in New York respected the separateness between the republic of Honduras and its instrumentality Corfino, an important holding that advances international comity," the firm's partner Juan Basombrio wrote.

Byrd's Washington-based lawyer Charles Byrd did not immediately return a request for comment.

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