Companies owed money by Meadow Creek Cedar will decide Monday whether to grant the company a 60-day extension on its outstanding payments.
“The creditors will be voting to either agree to or decline a further extension,” Ben Franklin of bankruptcy trustee Murphy and Associates said in an email.
If the creditors decline, “there is a possibility that the proposal could be annulled and the company adjudged bankrupt,” he said.
Meadow Creek Cedar filed a proposal for creditor protection in early 2009.
At the time it owed $427,000 in payroll deductions to Canada Revenue Agency, a secured creditor. Unsecured creditors were owed almost $1.5 million and were to receive 25 cents on the dollar.
The proposal was approved that fall. Five out of six payments to the tax collector have since been made, along with three out of four payments to unsecured creditors.
However, Meadow Creek defaulted on its final payments, due by the end of April and November 2010 respectively.
Trustee Lloyd Murphy attributed this to “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 said.
Following a discussion of “the company’s operations, cash flow, and plans to increase production and finished lumber for export,” 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 — was extended to March 7.
However, they missed that deadline as well.
Murphy was out of the office Wednesday and unavailable for comment on the latest potential extension.
Companies on the unsecured creditors list are from throughout BC and Alberta.