CEF/DIL: Monitor Update Dec 4, 2017 – An Ending and a Beginning

On Dec 4, 2017 the Monitor website was updated with documents 270-274.  The numbers in the following text correspond to document numbers on the Monitor website. The comments are my (lay) summary and interpretation of what they contain.

The TL,DR (Too Long, Didn’t Read) summary is – the end of District et al’s CCAA proceedings is almost at hand – and the Representative Action is about to start picking up steam.


270:  District Subcommittee Application – Not sure what this is.

271: Filed Affidavit of Erinn Wilson  – Contains a list of all the defendants in the Representative Action followed by questionnaires filled out by people who had funds with CEF / DIL. The people were asked when they knew that CEF was mismanaged and/or that LCC AB-BC was in financial trouble, an account of the person’s involvement with the Lutheran church, and a detailed account of the decision to deposit into the CEF.

The stories related in these pages are difficult to read – particularly the one where a couple in their 70s sold all their public stock shares and deposited ~$125K with CEF in early 2014 as a contingency for treating a spouse’s case of Crohn’s disease. Less than a year later their money was locked up and became inaccessible in Jan 2015 when ABC entered CCAA protection. This has understandably caused them additional stress and they have since resigned from LCC.

272:  Filed Application for Advice, Directions, Declarations and Related Orders – Legal documents pertaining to the Representative Action.There is emphasis on the age of the RA membership, their vulnerable state, and their need to pay for their care, all of which give cause to proceed with the case as expeditiously as possible.

273: Notice of Application filed on November 30, 2017 – Application by the Monitor, Deloitte Restructuring Inc, for Taxation of Accounts.

1 . An Order substantially in the form of Schedule “A”, attached hereto:
(a) abridging the time for service of the notice of this Application and, if necessary, deeming service of this Application together with all supporting materials to be good and sufficient;
(b) approving the professional fees and disbursements of the Monitor and the Monitor’s legal counsel for the period ending October 31, 2017 for the District, without the necessity of a formal passing of accounts; and
(c) approving the professional fees and disbursements of the Monitor and the Monitor’s legal counsel for the period ending October 31, 2017 for DIL, ECHS and EMSS, including estimates to complete the administration of each of DIL’s, ECHS’s and EMSS’s respective CCAA proceedings, without the necessity of a formal passing of accounts;

I take all this to be a long way of saying “We want to be paid for our work.”

The document has a list of fees for the period ending Oct 31, 2017 for the various proceedings.  The Monitor spent ~7,000 hours in administering the CCAA proceedings for the period ending October 31, 2017. The average standard hourly billing rate is approximately $297.

Of particular note is the disruption and cost caused by the repeated interference of the “dissenter” group over the course of the proceeding:

Fees of the Monitor’s Legal Counsel

14. Legal counsel to the Monitor played a more significant role in the Applicants’ CCAA proceedings, as compared to other CCAA proceedings as a result of, inter ells, the following: (a) The requirement to defend the Monitor, as an Office of the Court, from serious allegations raised by certain opposing creditors, which allegations were ultimately dismissed; (b) The work required for the establishment of the District and DIL creditor’ committees; (c) The inclusions of the provisions related to the Representative Action in the District and DIL Plans, which required independent oversight from a party other than the Applicants; (d) The additional stakeholder consultation that occurred; and (e) The lack of documentation related to various matters, 

Special Considerations

15: (c) The Applicants’ records were often incomplete with certain agreements and arrangements remaining largely undocumented; (g) Significant opposition was encountered throughout the CCAA proceedings from opposing creditors, which significantly increased the professional time required to administer the CCAA proceedings.

This information also appears in the Monitor’s 33rd report, discussed below.

274. Letter to Service List – Not sure what this is.


The Monitor’s 33rd report dated Nov 30, 2017. Following are what I see as the major points of the report. All numbers refer to paragraphs in the report.

  • 10:  the financial information of the Applications has not been audited nor has it been checked for following GAAP by the Monitor – ie use these numbers at your own risk
  • 13.1, 13.2:  order lifting the stay for the purpose of letting the Representative Actions proceed
  • 19: The District subcommittee has been re-formed and Higgerty Law has been retained as counsel
  • 22: The First Lutheran Kelowna mortgage has been settled and $5.6M paid to DIL
  • 23: ~80% of the DIL depositor funds have been returned to them at this point
  • 25 – 26: discussion pertaining to a parsonage lot which hasn’t been sold yet and how it will be handled outside of the CCAA process
  • 33: Discussion of various fees and charges, a summary of the Monitor’s activities over the course of the case, qualities of this case which made it particularly complex including (41-43) incomplete record keeping resulting in no records being available prior to June, 2006.
  • 47: Significant creditor opposition to the CCAA proceedings required substantial additional work on the part of the Monitor,
  • 48: Cash flow forecast
  • 55: CCAA proceedings for DIL are complete
  • 56: DIL will have distributed all its cash by Jan 6, 2018
  • 59: Once DIL’s paid out all its cash it’s bank account will be closed.
  • 60: CCAA proceedings for ECHS are complete except for the parsonage lot which is addressed elsewhere (25-26)
  • 63: Once ECHS has paid out or transferred all its assets its bank account will be closed.
  • 64: CCAA proceedings for EMSS are complete
  • 68: Once EMSS has paid out or transferred all its assets its bank account will be closed.

Schedules:

  • 1: District- Summary of Monitor professional fees and disbursements over the course of the proceeding (Grand total: $942,456 + tax)
  • 2: District – Summary of legal counsel fees and disbursements over the course of the proceeding (Grand total: $507,536  + tax)
  • 3: DIL, ECHS, EMSS – Summary of Monitor professional fees and disbursements over the course of the proceeding (Grand total: $1,205,635 + tax)
  • 4: DIL, ECHS, EMSS – Summary of legal counsel fees and disbursements over the course of the proceeding (Grand total: $398,819 + tax)
Total Monitor fees:     $2,148,091 + tax 
Total Legal fees:       $  906,355 + tax 
Grand total all fees:   $3,054,446 + tax 

Update 2017-12-06: These fees do not include the cost for the CRO (Chief Restructuring Officer) – once those are added in the total cost will be higher.


Credit:
Featured image from Liz Weston When Bankruptcy Is the Best Option

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