The receiver in charge of a defunct grain trading company has compiled
a list of creditors that is a veritable who’s who of the special crops
industry.
On April 30, 2002, the Royal Bank of Canada forced Cancom Grain Company
Inc., a Winnipeg special crops trader, into receivership.
The bank is one of two secured creditors listed on official
receivership documents prepared by PricewaterhouseCoopers Inc.
The Royal Bank is owed $6.1 million. Bailey Brothers Seed Inc., the
other secured creditor, is owed $2.1 million.
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As well, about 300 individuals and companies are listed as unsecured
creditors. Cancom’s debt to them ranges from $1 to $2,170,972.
Company assets, which primarily consist of accounts receivable and
grain inventories, total nearly $10 million. But an official with the
federal government’s Office of the Superintendent of Bankruptcy said
the receiver will have a tough time reaching that total when it
liquidates inventory and collects receivables.
Russ Krawetz said it would be a “miracle” if there is any money left
over for unsecured creditors. He said that is “extremely rare” in such
cases.
Topping the list of unsecured creditors is Lansing Grain Company, an
independent agriculture merchandising firm based out of Lansing,
Michigan, that is owed more than $2 million. Other big debts include:
- CP Rail – $700,841
- Finora Canada Ltd. – $478,915
- Parkland Pulse Grain Company Ltd. – $391,165
- Roy Legumex Inc. – $372,300
- Pulses Etc., S.A. – $345,925
- Berdex Canada Ltd. – $380,760
Special crops analyst Brian Clancey said when he hears names like
Berdex, Roy Legumex and Finora on the line for a few hundred thousand
dollars he doesn’t reach for the panic button.
“I don’t think that the amounts you are talking about are enough to
jeopardize those companies because those companies are fairly
substantial,” said the publisher of the Stat markets newsletter.
“I think it would be shocking if this took them down. I just can’t see
it.”
While he doesn’t see a domino effect in terms of further failures of
big players in the special crops industry, Clancey said Cancom’s demise
exposes “terrible margins” that may eventually pick off some of the
weaker links in the chain.
Some of the new entrants in the pulse trade have scant experience and
limited knowledge of how markets work compared to Brian Crane, who was
the driving force behind Cancom. If his company couldn’t succeed, the
new ones could be in big trouble.
“A lot of them haven’t been somewhere where they have really learned
the ropes and risen up through the trade,” said Clancey.
The larger, more established companies are populated by experienced
traders who are better equipped to deal with the financial storm
brought on by last year’s drought, said the analyst.
Brokers, processors and grain traders weren’t the only names on the
list of Cancom’s unsecured creditors.
Dozens of farmers were there as well. Analysts speculate they were
producers who had delivered canaryseed to the company, a crop that is
not covered by the Canada Grain Act.
Most farmers who are owed money will seek recompense through the
Canadian Grain Commission, which holds a bond posted by Cancom.
CGC commissioner Chris Hamblin said the bond is not listed as an asset
on the receivership documents because it can’t be touched by anybody
but the grain commission.
She said the commission just started posting notices in newspapers
inviting producers to file claims, so they don’t have a good grasp yet
on what the total claim will be.
“We’re hopeful, obviously, that there will be adequate bonds to cover
the producers, but until we actually get notice from the producers we
won’t know for sure.”
She said the grain commission will be looking at Cancom’s list of
unsecured creditors to see if they need to investigate any other
licensed companies that are owed money, but there are no obvious
suspects at this point.
