A grain dealer known for innovative services and bold policy statements has been placed in receivership.
But it is not yet clear whether
Palliser Grain Co. Ltd. of Calgary will be able to restructure or be forced to declare bankruptcy.
Palliser and the two small elevators it runs at Red Deer and Kathyrn, Alta., were put under the control of Price Waterhouse on March 17.
Officials at Palliser and Price Waterhouse did not return calls.
Palliser’s grain dealer licence expired March 16 when the Alberta government, through its Agriculture Financial Services Corporation, refused to extend a $2 million letter of credit.
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The credit was security posted with the Canadian Grain Commission, and was for farmers who have delivered grain to the company but haven’t been paid or cashed cheques.
A spokesperson for the commission said Palliser’s licence was up for renewal in November. Its security, however, was good until May 31. So the commission extended the licence until Feb. 28.
In a news release, Palliser said the Alberta government had provided letters of credit for the company for 10 years, but advised the company on Feb. 27 it wouldn’t renew the letters.
The grain commission gave Palliser another two-week extension to March 16 to give the company time to negotiate with the Alberta government.
“When that didn’t come through, we had no choice but to not renew the licence,” said Brian Schledewitz.
Schledewitz said he doesn’t yet know how many farmers haven’t been paid or how much they’re owed but he expects there are quite a few. He said he spent all last week on the phone with farmers.
He’ll know by April 30, the deadline for farmers to file a claim with the commission.
“We don’t guarantee we’re going to have dollar for dollar covered in our security,” said Schledewitz.
“We try our best to get the maximum coverage, but we can’t guarantee it.”
If there’s not enough security to cover claims, the commission will divide it on a pro-rated basis. For example, farmers might each get 90 cents of each dollar they are owed.
Schledewitz noted Price Waterhouse will also be making some payments to producers.
Farmers are eligible for part of the security if they delivered grain to Palliser in the last 90 days, or if they’re holding a cheque issued in the last 30 days.
Farmers owed money need to send the commission a letter stating how much they’re owed, plus a copy of any receipts, cash tickets, bills of lading or other documents.
Schledewitz said he doesn’t know how the price will be determined on grain delivered to Palliser under a basis contract.
These contracts lock in a basis, but allow the farmer to price the grain anytime within 90 days of delivery.
He said he doesn’t know whether the commission or the receiver will determine the price on these contracts.
Farmers who have contracted grain to Palliser but haven’t yet delivered it should contact Price Waterhouse in Calgary, said Schledewitz.
The receiver may have sold the contract to another grain company.
Schledewitz said this is the biggest receivership situation the grain commission has handled since 1982, when Econ Consulting Ltd. of Winnipeg and Memco Processors Ltd. of Red Deer went under.
Farmers with questions can call Schledewitz at the Canadian Grain Commission at 204-983-2789 or Palliser Grain Co. Ltd. at 403-291-4450.
