<SUBMISSION>
<ACCESSION-NUMBER>0001181431-10-063672
<TYPE>4
<PUBLIC-DOCUMENT-COUNT>1
<PERIOD>20101227
<FILING-DATE>20101227
<DATE-OF-FILING-DATE-CHANGE>20101227
<REPORTING-OWNER>
<OWNER-DATA>
<CONFORMED-NAME>Taylor Russell Clyde
<CIK>0001481168
</OWNER-DATA>
<FILING-VALUES>
<FORM-TYPE>4
<ACT>34
<FILE-NUMBER>001-34606
<FILM-NUMBER>101274744
</FILING-VALUES>
<MAIL-ADDRESS>
<STREET1>1855 LOCKEWAY DRIVE
<STREET2>SUITE 501
<CITY>ALPHARETTA
<STATE>GA
<ZIP>30004
</MAIL-ADDRESS>
</REPORTING-OWNER>
<ISSUER>
<COMPANY-DATA>
<CONFORMED-NAME>Cellu Tissue Holdings, Inc.
<CIK>0001295976
<ASSIGNED-SIC>2621
<IRS-NUMBER>061346495
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0228
</COMPANY-DATA>
<BUSINESS-ADDRESS>
<STREET1>3442 FRANCIS ROAD
<STREET2>SUITE 220
<CITY>ALPHARETTA
<STATE>GA
<ZIP>30004
<PHONE>(678)393-2651
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>3442 FRANCIS ROAD
<STREET2>SUITE 220
<CITY>ALPHARETTA
<STATE>GA
<ZIP>30004
</MAIL-ADDRESS>
</ISSUER>
<DOCUMENT>
<TYPE>4
<SEQUENCE>1
<FILENAME>rrd294832.xml
<DESCRIPTION>DISPOSITION IN MERGER
<TEXT>
<XML>
<?xml version="1.0"?>
<ownershipDocument>

    <schemaVersion>X0303</schemaVersion>

    <documentType>4</documentType>

    <periodOfReport>2010-12-27</periodOfReport>

    <notSubjectToSection16>1</notSubjectToSection16>

    <issuer>
        <issuerCik>0001295976</issuerCik>
        <issuerName>Cellu Tissue Holdings, Inc.</issuerName>
        <issuerTradingSymbol>CLU</issuerTradingSymbol>
    </issuer>

    <reportingOwner>
        <reportingOwnerId>
            <rptOwnerCik>0001481168</rptOwnerCik>
            <rptOwnerName>Taylor Russell Clyde</rptOwnerName>
        </reportingOwnerId>
        <reportingOwnerAddress>
            <rptOwnerStreet1>1855 LOCKEWAY DRIVE</rptOwnerStreet1>
            <rptOwnerStreet2>SUITE 501</rptOwnerStreet2>
            <rptOwnerCity>ALPHARETTA</rptOwnerCity>
            <rptOwnerState>GA</rptOwnerState>
            <rptOwnerZipCode>30004</rptOwnerZipCode>
            <rptOwnerStateDescription></rptOwnerStateDescription>
        </reportingOwnerAddress>
        <reportingOwnerRelationship>
            <isDirector>1</isDirector>
            <isOfficer>1</isOfficer>
            <isTenPercentOwner>0</isTenPercentOwner>
            <isOther>0</isOther>
            <officerTitle>President, CEO</officerTitle>
        </reportingOwnerRelationship>
    </reportingOwner>

    <nonDerivativeTable>
        <nonDerivativeTransaction>
            <securityTitle>
                <value>Comon Stock</value>
            </securityTitle>
            <transactionDate>
                <value>2010-12-27</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>D</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
                <footnoteId id="F1"/>
            </transactionCoding>
            <transactionAmounts>
                <transactionShares>
                    <value>691741</value>
                </transactionShares>
                <transactionPricePerShare>
                    <value>12.00</value>
                    <footnoteId id="F1"/>
                </transactionPricePerShare>
                <transactionAcquiredDisposedCode>
                    <value>D</value>
                </transactionAcquiredDisposedCode>
            </transactionAmounts>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>0</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>I</value>
                </directOrIndirectOwnership>
                <natureOfOwnership>
                    <value>By LLC</value>
                    <footnoteId id="F2"/>
                </natureOfOwnership>
            </ownershipNature>
        </nonDerivativeTransaction>
    </nonDerivativeTable>

    <derivativeTable>
        <derivativeTransaction>
            <securityTitle>
                <value>Employee Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>5.28</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2010-12-27</value>
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                <transactionFormType>4</transactionFormType>
                <transactionCode>D</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
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            <transactionAmounts>
                <transactionShares>
                    <value>96010</value>
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                <transactionPricePerShare>
                    <footnoteId id="F3"/>
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                <transactionAcquiredDisposedCode>
                    <value>D</value>
                </transactionAcquiredDisposedCode>
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            <exerciseDate>
                <footnoteId id="F3"/>
            </exerciseDate>
            <expirationDate>
                <value>2019-04-13</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>96010</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
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                <sharesOwnedFollowingTransaction>
                    <value>0</value>
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            <ownershipNature>
                <directOrIndirectOwnership>
                    <value>D</value>
                </directOrIndirectOwnership>
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        </derivativeTransaction>
        <derivativeTransaction>
            <securityTitle>
                <value>Employee Stock Option</value>
            </securityTitle>
            <conversionOrExercisePrice>
                <value>11.45</value>
            </conversionOrExercisePrice>
            <transactionDate>
                <value>2010-12-27</value>
            </transactionDate>
            <transactionCoding>
                <transactionFormType>4</transactionFormType>
                <transactionCode>D</transactionCode>
                <equitySwapInvolved>0</equitySwapInvolved>
                <footnoteId id="F3"/>
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            <transactionAmounts>
                <transactionShares>
                    <value>69814</value>
                </transactionShares>
                <transactionPricePerShare>
                    <footnoteId id="F3"/>
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                <transactionAcquiredDisposedCode>
                    <value>D</value>
                </transactionAcquiredDisposedCode>
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            <exerciseDate>
                <footnoteId id="F3"/>
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            <expirationDate>
                <value>2020-01-27</value>
            </expirationDate>
            <underlyingSecurity>
                <underlyingSecurityTitle>
                    <value>Common Stock</value>
                </underlyingSecurityTitle>
                <underlyingSecurityShares>
                    <value>69814</value>
                </underlyingSecurityShares>
            </underlyingSecurity>
            <postTransactionAmounts>
                <sharesOwnedFollowingTransaction>
                    <value>0</value>
                </sharesOwnedFollowingTransaction>
            </postTransactionAmounts>
            <ownershipNature>
                <directOrIndirectOwnership>
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                </directOrIndirectOwnership>
            </ownershipNature>
        </derivativeTransaction>
    </derivativeTable>

    <footnotes>
        <footnote id="F1">On December 27, 2010, a wholly owned subsidiary of Clearwater Paper Corporation merged with Cellu Tissue Holdings, Inc. pursuant to a merger agreement entered into between Clearwater Paper and Cellu Tissue on September 15, 2010 (the &quot;Merger&quot;), as more fully described in the Cellu Tissue proxy statement dated December 1, 2010 filed with the SEC. Each share of common stock of Cellu Tissue was converted into $12.00 in cash. Cellu Tissue board of directors approved the disposition by the Reporting Person in the Merger.</footnote>
        <footnote id="F2">Reporting person disclaims beneficial interest in the securities held by the LLC except to the extent of his pecuniary interest.</footnote>
        <footnote id="F3">In connection with the Merger, each outstanding Cellu Tissue option to purchase shares of common stock, whether or not vested, was cancelled and Reporting Person received a cash payment in an amount equal to the number of shares of common stock represented by each option, vested or unvested, multiplied by the excess, if any, of $12.00 over the exercise price per share under each option. Reporting Person's disposition of options in the Merger was approved by the Cellu Tissue board of directors.</footnote>
    </footnotes>

    <ownerSignature>
        <signatureName>/s/ W. Edwin Litton, Power of Attorney</signatureName>
        <signatureDate>2010-12-27</signatureDate>
    </ownerSignature>
</ownershipDocument>
</XML>
</TEXT>
</DOCUMENT>
</SUBMISSION>
