The monitor for the San Group of companies has been granted broader powers by the Supreme Court of 小蓝视频 to manage and make decisions about the financially troubled forestry company, which has operations in Port Alberni.
The San Group’s protection from creditors was extended at a court hearing in Vancouver on Thursday. The next hearing is set for Jan. 16.
Expanded powers granted to Deloitte include the ability to administer the company’s restructuring and any winding down of the business, plus liquidating property and disposing of assets. The monitor is permitted to manage, operate and continue running the business, and said it anticipates working with current management as the situation unfolds.
The various parties are expected to be back in court to ask for approval for a sale and investment solicitation process, said Deloitte, adding it has started talks with the company but does not yet have enough information.
At the same time, the court agreed the company can increase its borrowing limit to $1 million — up by $400,000 — to keep operations going.
The San Group, which filed for creditor protection on Nov. 29, has about 20 related companies, including sawmills and re-manufacturing plants in Port Alberni and Langley.
Its Acorn sawmill and plant in Delta is not operating because of a large fire in April. Insurance coverage for the fire is under discussion with the insurance company and San Group. The company leases the Acorn site and also has a lease agreement with the Alberni Port Authority.
In its second report to the court, monitor Deloitte Restructuring Inc. highlighted concerns about difficulties obtaining financial information and cautioned that financial goals in the latest cash-flow forecast are subject to evolving conditions.
Company operations are running at a “reduced capacity,” the report said.
There is no log supply available currently and none guaranteed for the San Group in the short term, it said.
The company is carrying out a custom log-cut agreement with a third party for logs to be delivered and processed in Port Alberni and in Langley, the report said.
The group is relying on custom contracts to support most of its revenues for now, the monitor said.
The report noted that there is uncertainty about whether the company will be permitted to ship orders into the U.S. after Jan. 6 due to U.S. customs requirements.
There is a need “for more control of the petitioners’ operations and the need for more accurate and timely information from the petitioners,” the report said.
A list of the monitor’s concerns included the fact the company wrote off $20-million in the value of its log and lumber inventory this year. There is no clear explanation from management about the timing of the write-down or documents breaking down the amounts, the report said.
Also, it’s not known if any logs in booms in the water that were lost when severe weather hit in November — valued at $6 million — have been recovered, the report said.
The San Group owes more than $150 million to two banks that are primary lenders and secured creditors, the monitor said. It also owes $22 million to the province for unpaid stumpage fees and other debts. A creditors’ list numbers in the hundreds.
