Many western Canadian farmers will likely see delays in payment for their grain as export company Ilta enters financial trouble.
The company was granted creditor protection Monday 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 move lets Ilta avoid bankruptcy for now, allowing it to provide creditors with some form of payment.
“The decision to file for creditor protection was not taken lightly, but is a necessary step for the company to address its financial affairs,” said CEO Dan Burneski in the letter dated July 9.
“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.”
In a separate letter to grain suppliers, Burneski said all balances outstanding prior to July 8 are stayed and won’t be paid by the company.
He said the company is working with the Canadian Grain Commission (CGC) to help suppliers through the claims process to recover amounts.
The CGC is aware Ilta us under creditor protection, and is gathering more information before it can take action.
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 Saskatchewan and two locations in Manitoba, handling pulses and oilseeds for western Canadian farmers.
During its restructuring period, Ilta will work with PwC and provide updates regularly at www.pwc.com/ca/ilta-grain.