Ilta Grain granted creditor protection

Many western Canadian farmers will likely see delays in payment and might not be paid in full for their grain as a significant pulse exporting company enters financial trouble.

Ilta Grain was granted creditor protection July 8 at the Supreme Court of British Columbia, stating in a letter to vendors and suppliers that the move is necessary to restructure operations and secure additional financing.

“The decision to file for creditor protection was not taken lightly, but is a necessary step for the company to address its financial affairs,” chief executive officer Dan Burneski stated in the July 9 letter.

“We found it necessary to initiate the CCAA (Companies’ Creditors Arrangement Act) filing in order to support our efforts to restructure our operations and secure additional financing to fund the continued development of our business.”

The move permits Ilta to avoid bankruptcy for now, allowing it to pay some creditors at least partially.

Addressing grain producers, Burneski said all balances outstanding before July 8 are stayed and won’t be paid by the company.

He said the company is working with the Canadian Grain Commission to help suppliers through the claims process to recover amounts owing.

CGC spokesperson Rémi Gosselin said the commission has suspended Ilta’s licences, stopping it from buying grain that is registered under the Canada Grain Act.

Ilta has also has been prohibited from selling grain stocks in store, in which grain receipts and primary elevators receipts are outstanding.

Gosselin said grain transactions that were done before July 11 are not at risk of nonpayment.

He can’t say how many producers are affected, but encouraged them to contact the CGC to make claims.

“The CGC provides payment protection for producers by obtaining security from licences, but the CGC cannot guarantee that producers will be paid in full if a licence defaults on its obligations,” he said. “Ilta Grain had security in place up to July 10, 2019, and the CGC is engaging with the company on amounts owed to producers to determine if sufficient security was in place.”

Carl Potts, executive director of the Saskatchewan Pulse Growers, said Ilta’s financial position is disappointing, but added it’s a sign of the times.

He said market access issues with India have negatively affected farmers and exporting companies, adding a return to market stability would be welcome.

“A return to a more normal state of trade for pulses would help,” he said. “Another thing we’re working on in the longer term is to diversify the market base, developing new demands in new uses for pulses.”

In court documents, Ilta pointed to international trade conditions for its financial trouble. It said conditions have reduced revenues, limiting its ability to pay off debt. It said imports by significant export countries such as India, China and Saudi Arabia have been limited.

With the CGC claim process, Potts hopes any payments owed to producers are covered.

“All (that) remains to be seen if that can fully cover liabilities to growers, but in recent instances where that program has been utilized, growers have a been paid a very high percentage of the liabilities,” he said. “We’re hoping that will be the case here, but we don’t know yet.”

Under creditor protection, Ilta remains in control of its property and business, but is now under the supervision of PricewaterhouseCoopers (PwC), which was appointed in court as the monitor.

As for vendors, Burneski said the company is taking steps to ensure they are paid in full for goods and services delivered after the filing date.

However, the court order prevents vendors or suppliers from collecting payment for goods and services before the filing date. The order also prevents collection action from being taken.

Going forward, Burneski said it plans to arrange for additional financing to fund its operations during the restructuring process, with PwC reporting on its cash flow to court on a periodic basis.

Ilta has six facilities in Sask-atchewan, including sites at Saskatoon, Swift Current, Belle Plaine, Cut Knife and North Battleford.

It previously had an edible bean processing plant at Bloom, Man., and a receiving operation at Miami, Man., but sold both in January to Ontario-based Hensall District Co-operative.

During its restructuring period, Ilta will work with PwC and provide updates regularly at www.pwc.com/ca/ilta-grain.

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