Findings contained in a receiver’s reports likely won’t sit well with farmers who expect to receive 10 to 15 cents on the dollar for what they’re owed by Naber Specialty Grains Ltd. of Melfort, Sask.
In its first report to the receiver dated Nov. 12, 2015, Ernst & Young contends that NSGL made personal payments to former owner Todd Naber worth more than $667,000 between June 6, 2014 and June 18, 2015, the day NSGL was placed in receivership.
The report goes on to state that another company controlled by Naber — TK Equipment Ltd. (TKEL) — owes NSGL more than $151,000 and that an incorporated farming operation owned by Naber — TKN Company Farm Ltd. — owes NSGL more than $526,000.
Naber and his legal counsel have disputed some of the report’s findings, suggesting that any amount owed by TKEL and TKN was offset by grain deliveries and other services that were provided to NSGL.
“The claim by the receiver of amounts owing (to NSGL) by Todd Naber associated companies are based on prior fiscal years 2013 and 2014 and are based on incomplete and not current records,” Naber wrote in a May 20 email to The Western Producer.
“Amounts owing by Todd Naber companies were retired in 2015 through transportation services provided to the firm and grain deliveries received by the firm in kind.”
Ernst & Young also claims that Naber is indebted to NSGL for fertilizer inventories valued at almost US$160,000.
“The fertilizer was purchased in the name of NSGL in late April 2015, and the receiver is advised that the fertilizer was used in Mr. Naber’s farming operations,” the November 2015 receivers report stated.
“No fertilizer inventory was on hand at NSGL upon the receiver’s appointment.”
In a letter dated Oct. 7, 2015, Naber’s lawyers claim that Naber has been in contact with the fertilizer supplier, Gavilon Fertilizer LLC, and has requested that the fertilizer shipment be re-invoiced to Naber or his farming company (TKNCFL).”
According to Joe Healey, a senior vice-president and licensed insolvency trustee with Ernst & Young, all statements contained in the first and second receiver’s reports — dated November 2015 and April 2016, respectively — are based on all the relevant information that was available.
However, key pieces of information are missing from the record.
Ernst & Young has requested additional documentation from Naber, but the documents requested have yet to be filed.
Naber’s lawyers say nine boxes of records, delivered to Ernst & Young on June 24, 2015, represent all of the companies’ books and records for 2013, 2014 and 2015.
The receiver’s report says “based upon feedback and inquiries from numerous creditors, it is apparent to the receiver that there are a significant number of unsecured creditors who appear to be owed funds by NSGL, yet the accounts payable records or NSGL accounting records did not disclose that those parties were owed money.”
Naber, who owned NSGL and Melfort Grain Terminal Ltd., said statements contained in a November 2015 receiver’s report prepared by Ernst & Young — including debt calculations and accounts receivable — are based on incomplete records.
“The receiver did not work with current and complete company records at the time of the receivership,” Naber wrote in a June 6 email.
“There are no current amounts owing to the company (NSGL) by any shareholder or associated company.”
He said there is a plan in place to ensure producers are paid 100 percent of what they’re owed.