Farmers and others owed money by Saskatchewan’s largest hog production company have voted not quite unanimously to take a deal in which unsecured creditors, on average, can expect less than 15 cents on the dollar.
Out of 774 voting creditors of Big Sky Farms and its affiliated companies meeting Monday in Saskatoon, 762 voted in favour of the proposed plan of arrangement put forward by Big Sky’s court-appointed monitor, Ernst and Young.
In all, secured and unsecured creditors of Big Sky, owed a total of $35.18 million, will share a total pot of $4.82 million. Unsecured creditors’ total estimated recovery under the proposed plan of arrangement works is about 14.7 per cent.
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Under the terms of the plan, an unsecured creditor with a proven claim of less than $4,000 could opt for a cash payment equal to 99 per cent of the proven claim.
Unsecured creditors with proven claims over $4,000, meanwhile, could opt by Feb. 4 to get either $3,960 cash each or 10 per cent of the value of the proven claim.
Lawyers for the company have now filed in Saskatoon Court of Queen’s Bench for a further extension of the company’s creditor protection, which is due to run out Thursday (Feb. 11).
The extension would run until either March 18 or one business day after the plan, now waiting for final court approval, is implemented.
The company’s lawyers are also asking for a court order allowing Big Sky to put off holding an annual shareholders’ meeting until June 30 at the latest, as the company “requires additional time” to put its plan in place and complete the restructuring of its business and financial affairs.
Only then, the company said in its proposed court order, would it be “in a position to provide meaningful information to its shareholders.”
According to an affidavit filed Sunday by Big Sky’s chief financial officer Canute Tagseth, Big Sky’s shareholders haven’t held an annual general meeting since November 2008.
The company is also seeking an order to scrap the previous unanimous shareholders’ agreement held by Big Sky’s shareholders, as the restructuring plan “will render the existing agreement… irrelevant and out of date.”
Had Big Sky instead been forced into bankruptcy, costs due to other obligations such as terminating contracts and terminating employees would “further serve to dilute the recovery to unsecured creditors,” Ernst and Young noted in a letter to the company.
Unsecured creditors “would be significantly better off” accepting Big Sky’s plan of arrangement and reorganization, Ernst and Young senior vice-president Kevin Brennan wrote in December to Big Sky CEO Casey Smit.
