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League group, behind Colwood's Capital City Centre, file for creditor protection
Investors eagerly waited for answers on the first conference call since League Group filed for creditor protection last Friday.
League Financial Partners, the group behind Colwood’s Capital City Centre project, filed under the Companies’ Creditors Arrangement Act.
This a process where a corporation asks the court to put a stay in place for its creditors and shareholders.
Between struggles with financing the Colwood project as well as one in Duncan along with challenges creating two public companies last year, League felt filing for CCAA was the only option, said Adam Gant, League Group CEO.
“We needed to protect the assets during the reorganization,” Gant said. League has 30 days (until Nov. 18) to come up with a plan to propose to creditors and shareholders.
“This is disappointing for sure,” said Colwood Mayor Carol Hamilton. “League has 105 projects and if you have 105 projects in the air, something is going to fall.”
Capital City Centre was marketed to Colwood residents as creating a “downtown” hub for the city.
“This project is a priority and even if it’s not League who finishes it (someone will be keen to). It’s a very attractive site,” Hamilton said.
Hundreds of investors dialed in to a conference call hosted by PriceWaterhouseCoopers and League Financial Partners, Wednesday (Oct. 23).
Michael Vermette of PriceWaterhouseCoopers, Gant, and attorney John Greaves explained the situation and answered investors’ questions.
“This was a very tough decision,” said Gant. “Many of my family and closest friends were some of the initial investors.”
Gant asked the investors to submit ideas for the company’s restructuring.
“We’d like to hear from people in terms of the plan they’d like to see going forward,” Gant said. “We are looking for the best plan possible.”
PriceWaterhouseCoppers is acting as an officer of the court, explained Vermette and is in the process of compiling a report with more information to be online.
Filing a CCAA is different from a liquidation or bankruptcy. League Group will continue to operate under current management and employees will still receive paycheques.
“They can continue with payroll and keep the lights on, so to speak,” explained Vermette.
League Group is currently in a 30-day period of creating a restructuring plan and will be back in court for a comprehensive hearing on Nov. 18.
“Now League can determine what it wants to do going forward,” Vermette said. “League itself will take some restructuring steps … streamline operations and make them more profitable and viable.”
After the hearing, stakeholders will have the option to look at the restructuring ideas and could ask the court to liquidate the company.
“It’s very much a function or consultation with the stakeholders,” Vermette explained.
“It’s far too early to make that decision. League advised us the right thing would happen for the benefit of the investors.”
It’s also too soon to tell if investors will see any of their money, he said. “The company reported it believed there is equity in its assets.”
League Group estimates its assets are worth about $200 million.
Greaves said he hopes to be appointed as representative council to the 3,300 investors.
He would work on behalf of stakeholders and mentioned the stakeholder may form subcommittees for each League project and appoint representatives for each group, as it’s hard for him to meet with so many investors.
“I suspect the majority of investors are on Vancouver Island,” Greaves said, anticipating the court would appoint League to cover the legal costs of his services.