Mountain slide

Mountain Impact, the 10-year-old military surplus sporting goods company that once boasted some 72 employees and millions in annual sales, on June 27 cleared out its inventory and shut down its operations near the Chico Municipal Airport.

It’s a disappointment to William Meehand, who had been hired as chief financial officer in January 2001 and ascended to chief executive officer by the end of that year in hopes of turning around the company, California Outdoor Recreation Products (C.O.R.P.). The Chico retail store was only a small part of the business, which supplied tents, rucksacks, camouflage clothes and the like to customers around the world.

Meehand said last week that he intended to file for Chapter 7 bankruptcy within a few days. “I no longer see this as a viable business,” Meehand said, adding that, for the sake of the 19 remaining employees, he would “stay in the battle if it were winnable.”

Big impact

Hints about the company’s downfall can be found in a lawsuit filed Feb. 7, 2002, in Butte County Superior Court.

C.O.R.P. sued former CEO John Lane, along with former CFO James Claysmith, for breach of fiduciary duty and other damages. The suit alleges that both Lane and Claysmith converted life insurance policies of which C.O.R.P. was the beneficiary to their own benefit and cashed them out for a value of approximately $118,000. Additionally, Lane allegedly took possession of clothes, merchandise, four military trucks and two trailers and charged at least $11,525 in personal items for which C.O.R.P. became indebted. To top it all off, the suit claims, Lane spent $20,441 in C.O.R.P. assets for work on his house.

Lane still owns 49 percent of the company; a German man by the name of Bernard Edelmann owns 51 percent. Claysmith, of Tehama County, had owned 2 percent but sold it to Edelmann.

Claysmith denied all the allegations and filed a cross complaint. They accused former executives of conspiring to get control of Claysmith’s interest while at the same time offering to buy Lane out for $800,000 and not following through.

Lane, who is now serving as interim pastor for adult ministries at the Paradise Alliance Church, did not return calls for comment, nor did the attorney for both Lane and Claysmith, Rik Barsotti of Paradise.

The case will continue under the direction of the bankruptcy trustees, Meehan said. Depositions are being taken and a jury trial is scheduled for January 2003.

Final blow

Meehan said the company’s financial situation became more difficult as the global market for its products softened. In the early and mid-1990s, C.O.R.P. had seen profits of $10 million a year, and executives each had at least one company Mercedes. Meehan immediately set about eliminating unprofitable divisions that had been initiated over the years, such as an Internet sales arm, a manufacturing division and the in-house graphics department. He closed the Redding Mountain Impact store; the one in Marysville had already been shuttered. “My hope was to focus the business on what it had been founded on, which is the wholesale surplus business,” Meehan said.

He said the setbacks could have been overcome if only Cupertino Bank, from which C.O.R.P. had borrowed more than $2 million, had been flexible in allowing the company to work its way out of default. “They were hardline in what they were demanding in payments,” Meehan said. First in line among creditors is Butte Community Bank, which holds title to the properties. The parcels—including the warehouse-style buildings upon them—are being offered for $1.5 million and $2.4 million.

Meehan, a longtime Chico resident, said C.O.R.P. made paying off local merchants its first priority. "My intention was not to leave anyone in the lurch."