Meadow Creek Cedar could fulfill the terms of its proposal to creditors by next week, a bankruptcy trustee says. The company, which sought creditor protection over two years ago, was granted an extension last month on its final set of payments.
The deadline to pay the outstanding money — about $71,000 to Canada Revenue Agency and a total of $91,000 to over 50 unsecured creditors — is now Monday.
Lloyd Murphy of Murphy and Associates, which has been acting as trustee, says while he can’t state for certain the funds will come through, everything looks positive.
“The principal as of [Tuesday] did confirm he has the money and is coming in with it. We’d like to get it wrapped up and they would too. Everybody wants their money, obviously.”
Meadow Creek’s proposal was filed in early 2009, but it took until that fall for creditors and the courts to approve. The company owed $427,000 in outstanding payroll deduction claims to Canada Revenue Agency, a secured creditor. Unsecured creditors, collectively owed almost $1.5 million, were to be paid 25 cents on the dollar.
Murphy says five out of six payments to the tax collector have been made, along with three out of four payments to the unsecured creditors. However, Meadow Creek defaulted on its final payments, which were due by the end of April and November 2010 respectively.
Murphy says this was for “various reasons” — the operation’s cash flow turned out to be less than projected, and an associated company expected to help with refinancing didn’t come through with the additional funds.
“A lot of the money to fund the proposal is coming from outside sources, so it’s not like the operation of the company per se is generating any huge cash flow that anyone’s benefitting from,” he says.
Last month, following a discussion of “the company’s operations, cash flow, and plans to increase production and finished lumber for export,” creditors approved an extension to March 7.
According to a memo from the meeting, the principal also confirmed he was negotiating with a “major bank to re-finance a related company with sufficient funds to allow for a cash injection into the mill operations.”
Murphy says things have been going “as well as could be expected” given the state of the lumber industry.
“The company has put additional equipment and software into the mill, plus they’ve hired more people. They’re optimistic that once they get this proposal completed the industry is going to improve and they’re going to have a good operation.”
Overall, he believes creditors are better off having accepted the proposal.
He adds the title to the property the mill sits on has been returned to the company by the Ministry of Finance after being seized for unpaid taxes. The ministry is among the unsecured creditors.
“That has all been reversed. They paid last year’s taxes, so it’s all been taken care of,” Murphy says.
When the Lardeau Valley sawmill first filed for creditor protection, it prevented a court bailiff’s sale of the company’s land and assets, ordered as the result of legal action taken by two creditors, Picture Valley Ranch and Mallard Logging.
The mill’s owner, Dale Kooner, is also president of Can-Pacific Packers of Surrey and has been involved with a number of transport companies.
Companies on the unsecured creditors list are from throughout B.C. and Alberta.