Atcon faces bankruptcy filings by bank
Boudreau told the legislative assembly that Scotiabank, the company's main lender, made two filings in the Court of Queen's Bench in Miramichi on Thursday.
The bank is asking that Atcon Construction, Atcon Industrial and Envirem Technologies be placed under the Companies Creditors Arrangement Act, which will allow a court-appointed monitor to watch Atcon while it continues to operate.
A second filing is under the Bankruptcy and Insolvency Act, which is being applied to the rest of Atcon's companies.
Boudreau said the lender is asking that the court appoint a receiver and manager for those Atcon companies.
Boudreau said the government has been made aware that a demand has been placed on the company to repay its loans.
"The province of New Brunswick has not yet received a demand on its guarantees. When and if government receives a demand to pay, we will comply with our contractual obligations," Boudreau said.
The province's lawyers are reviewing the documents, the business minister said. Boudreau would not say what the provincial government's financial exposure could be, but he acknowledged it could exceed $50 million.
A court hearing will be held in Miramichi on March 1 into the two filings.
"This is very, very bad news for the population in Miramichi and very bad news for the population of New Brunswick," said Progressive Conservative Paul Robichaud said.
The opposition MLA said he believes the loan guarantees were high-risk.
"I am convinced, given the nature of today's announcement, it is highly probable that the government received notice from the department … that these [loans] were high-risk loan guarantees and perhaps they shouldn't have gone ahead," Robichaud said.
"I hope the minister and the government did not decide to overrule recommendations that may have been made by department officials in this situation."
Despite the court filings, Boudreau defended the province's decision to offer $50 million in loan guarantees to Atcon last summer.
"When you are in this type of business, you make the decision based on the information that you have at hand on that day. You do it to the best of your ability. During Atcon's peak, hundreds of families relied on Atcon to put food on the table," Boudreau told reporters on Thursday.
"I don't shy away from that decision. Now we need to see how this process is going to unfold and what the long-term implications will be."
The controversial construction company lost its $165-million contract to build the Deh Cho Bridge in the Northwest Territories in January and faces a growing list of contractors that are launching or threatening legal action for allegedly unpaid bills.
"Tell us what is the status update today between the Province of New Brunswick, the loan guarantee and Atcon," Tory MLA Bruce Fitch asked Boudreau in the legislature.
"Or are you going to go out in the [legislative assembly's] rotunda and tell us that they are filing for bankruptcy or something? Tell us today what is the status of the loan guarantee between the province and Atcon."
Boudreau did not directly answer Fitch's questions but said his department is working closely with Atcon.
"We continue to work with Atcon just like we continue to work with many other files that we have at Business New Brunswick," Boudreau said. After question period, Boudreau told reporters that as of 3 p.m. AT, nothing had changed with the status of Atcon's loan guarantees.
Boudreau said at the time that the province was not concerned about its loan guarantees.
"Atcon is not a one trick pony; they don't just have one contract that they're working on," Boudreau said Jan. 8.
The New Brunswick government agreed on three different loan guarantees worth a combined $50 million last June.
The deal included:
- A $20-million loan guarantee to refinance an existing high-interest loan. This loan must be repaid in June 2010.
- A $20-million loan guarantee to increase Atcon Holdings' operating credit, allowing the company to bid on additional projects outside N.B. This loan guarantee must be repaid in 2013.
- A $10-million loan guarantee to complete the expansion of Atcon Industrial Services Centre in Miramichi. This loan guarantee cannot exceed eight years.
The $10-million loan guarantee is to help Atcon finance a steel fabrication facility, which was to build components for the Deh Cho Bridge project.
In 2008, the New Brunswick government gave Atcon a $13.3-million loan guarantee to help with the same project. That money allowed the company to meet the minimum criteria for the Northwest Territories to guarantee the entire cost of the bridge.
Kevin Pytyck served as Atcon's Calgary-based vice-president for its western operations until it closed the office in 2008. He is now the latest plaintiff to sue the company for unpaid bills.
Pytyck, who set up Atcon's western office, said he wasn't paid the severance that was built into his contract. Additionally, he is alleging that Atcon stiffed his personal company on office leases.
Allegations by Pytyck and others have not been proven in court.
In documents filed with the Court of Queen's Bench in Calgary, Pytyck is asking for $408,000 in unpaid severance. Also in the statement of claim, Pytyck's company is demanding $323,000 in an unpaid bonus, $229,250 for early termination of a lease and $48,000 in other unpaid fees.
As well, Winnipeg's Industrial Commercial Equipment Manufacturing, which makes large furnaces and air systems, filed a notice of action in the New Brunswick Court of Queen's Bench in Fredericton on Aug. 24 demanding more than $1 million from Atcon.
Tracer Industries Canada, a subsidiary of Houston-based Tyco Thermal Controls, said in September that it was considering suing Atcon for $656,000 in unpaid bills.