Court grants Monette Farms more time to restructure
REGINA — Monette Farms has been granted an extended stay of proceedings under Companies’ Creditors Arrangement Act protection.
Alberta King’s Bench justice Michel Bourque, during a virtual May 1 comeback hearing, accepted applications from the companies to operate under the CCAA until at least June 19.
You can follow all our coverage of Monette Farms here.
Read Also
Food agency plans trial for bird flu vaccination
Driven by ongoing highly pathogenic avian influenza discoveries, Canada’s food agency is launching a trial to test the feasibility of vaccinating Canada’s poultry birds.
The order means Monette will have access to another $50 million for spring seeding and other costs.
Bourque said he had seen the application material in advance and was satisfied the orders should be granted.
He also agreed the $29 -million sale of the Hafford, Sask., property, initiated prior to court proceedings, should take place.
Scotia Wealth lawyer Zach Soprovich told the hearing the parties had agreed on a process to handle an outstanding premium payment and cash surrender value of life insurance policies. It asked to be excluded from the stay to deal with the matter.
Why it Matters: Monette Farms entered CCAA protection April 21, and the first order expired May 1. The extension gives one of the largest privately held farms in North America more time to restructure. Monette owes about $900 million in secured debt.
Monette Farms is both the policy holder and beneficiary of two policies that would pay out $130 million in the event of Darrel Monette’s death.
A $2.1 million premium is due May 4, and the amount was not included in cash flow provisions in the first proceedings.
“BNS (Bank of Nova Scotia) is owed just under $7.75 million on the credit facility in this case, used to fund the life insurance policy premiums,” Soprovich said.
He said the insurers, Sun Life and Manufacturers Life, had been involved in the discussion of how to proceed.
The existing cash surrender value is $6.8 million, rising to $7.2 million if the policies remain in effect until May 4.
Soprovich said BNS is concerned that if the premium is not paid on May 4, or within 30 days after that, the cash value will decrease. That would also mean the policy isn’t in force, and Monette would owe the bank more money.
He said the lender agreed it would give Monette until May 26 to try to find the money to pay the premium. If not, it will collapse the policies and use the cash surrender value to pay down debt.
The lawyer representing the monitor, FTI Consulting, said it supported the plan.
Source: producer.com