INSOLVENCY & RESTRUCTURING FORUM
Mock Creditors Meeting
Presenters:
Alex Ng, D. Manning & Associates Inc.
Shelley Koehli, Smythe Ratcliffe Insolvency Inc.
Colleen Craig, C.E. Craig & Associates Inc.
Lucas Matsuda, PricewaterhouseCoopers Inc.
Michelle Grant, Ernst & Young Inc.
INSOLVENCY & RESTRUCTURING FORUM
Marlborough Company
• Operating > 20 years but recently encountered financial
difficulties
• Mr. Malt unwilling to invest additional monies
• 50 employees: paid to date / most of vacation pay current
• No reviewable or undervalued transactions
INSOLVENCY & RESTRUCTURING FORUM
List of Creditors of the Malborough Company
The company has the following creditors according to Mr. Malt:
•
•
•
•
•
Revenue Canada
Suppliers
Important supplier
Critical Supplier X
Rent
$ 125,000 deemed trust / $ 300,000 (arbitrary GST amount)
$ 400,000
$ 350,000
$ 25,000 (only one supplying a specific item)
$ 75,000 (landlord is a company controlled by Mr. Malt)
Agreed to file the entire claim as an unsecured creditor.
• Chill Bank
$ 500,000 (secured creditor on various pieces of equipment)
Your valuation is $200,000.
• Chill Bank
$ 250,000 (line of credit secured by inventory)
Your valuation is $50,000.
• Mr. Malt
$ 200,000 (injection of capital by the director)
Agreed to forego payments until the completion of the terms
INSOLVENCY & RESTRUCTURING FORUM
Terms of the Division I Proposal
• Chill Bank: payment to continue per current agreement
• Deemed trust: payable within 6 mo. of acceptance by court
• Unsecured creditors: dividend of 20% of amount owed as of filing
date / 4 installments / 1st due 12 mo. after payment of deemed trust
amounts
• Mr. Malt is agreeing to forego the Section 136 (1)(f) BIA claim and
file the entire claim as an unsecured creditor
• Mr. Malt is also agreeing to defer his $200,000 claim until the
completion of the terms of the proposal
• $100,000 fee to be taken from monies within the terms of the
proposal
INSOLVENCY & RESTRUCTURING FORUM
With respect to the trustee’s report on the proposal, should the
issue of the theft have been mentioned within the report sent to
all creditors?
A. There is no obligation to mention this issue in the report.
It is sufficient to mention it verbally at the meeting of
creditors.
B. Yes, the trustee has an obligation to mention it on the
trustee’s report.
C. Considering that all assets fall under the security of Chill
Bank, the Bank is the only creditor that needs to know
about this issue.
0%
0%
0%
A.
B.
C.
INSOLVENCY & RESTRUCTURING FORUM
How should the trustee deal with the proof of claim of Mr. Malt’s
ex-wife?
A. Accept the claim for $100,000 (original amount owed)
as the deed is silent on any interest on the loan.
B. Accept the claim for $200,000. A brief calculation of the
legal interest rate indicates that $100,000 is reasonable
for the duration of the loan (10 years).
C. Accept the claim for $75,000. Obtain proof of payment
from the debtor company later.
D. Accept claim for $100,000 for voting purposes only, but
if Mr. Malt can prove the payments were made, later
disallow to $75,000
0%
0%
0%
0%
A.
B.
C.
D.
INSOLVENCY & RESTRUCTURING FORUM
With respect to the request to suspend the meeting of creditors
from Mr. Important Supplier – what should the trustee do?
A. Suspend the meeting of creditors for 15 minutes.
B. Suspend the meeting of creditors for one week.
C. Obtain a resolution from the creditors authorizing the
postponement of the meeting of creditors.
D. Start the meeting regardless of the request from Mr.
Important Supplier.
0%
0%
0%
0%
A.
B.
C.
D.
INSOLVENCY & RESTRUCTURING FORUM
With respect to the vote, do you let CRA vote on its $125,000
deemed trust claim?
A. Yes
B. No
0%
A.
0%
B.
INSOLVENCY & RESTRUCTURING FORUM
With respect to the vote, do you let CRA vote on its $300,000
arbitrary claim?
A. Yes
B. No
0%
A.
0%
B.
INSOLVENCY & RESTRUCTURING FORUM
As the designated trustee of the estate, do you:
A. Reduce your fee to the level acceptable to
CRA and the other creditors.
B. Refuse to reduce your fee.
C. Negotiate an acceptable fee.
0%
0%
0%
A.
B.
C.