On Jan 15, 2015 LCC ABC District shocked the Lutheran Church-Canada community when it declared a “sufficient cash flow shortage” and froze all withdrawals from its CEF and then DIL investment funds. District personnel later blamed a “perfect storm” of withdrawals, outstanding loans, and a lack of other investments that could earn money for the action.
After an abortive attempt to self-restructure, District filed for “Companies’ Creditors Arrangement Act” protection in order to restructure their affairs. As part of this process the court appointed various legal and financial experts to
- investigate the District’s affairs,
- report what they found to the court,
- sell all of District’s assets,
- develop a plan of arrangement for returning funds to the creditors and get the creditors’ approval,
- distribute any recovered funds back to the creditors.
As the various court-appointed companies dug into the smoking crater that had been ABC District they periodically filed reports of their findings and actions with the court. These reports clearly showed that the publicly stated reasons District gave for the insolvency had no correlation with what actually happened – namely that ABC District had been spending depositor funds on projects it had no business funding in a futile effort to avoid getting caught with its hand in the proverbial cookie jar.
Specifically, the ABC District squandered the trust and treasure of it’s members on
- a life-lease seniors village (Prince of Peace Village)
- a speculative real-estate / business venture (Prince of Peace Harbor and Manor),
- a church and school with no ability to repay (Prince of Peace Lutheran Church and School), and
- a second “retirement village” (Shepherd’s Village Ministries)
Of the projects on this list only the church and school fit into the CEF fund’s mandate. And if the church and school’s loan application had been properly vetted, it too would’ve been declined for lack of ability to pay.
Four plus years and hundreds updates later, the court-appointed Monitor posted the “Monitor’s Thirty-Seventh Report” to their website. This report detailed three pending events of particular interest –
- The “Tuscany Lands” – which had been on the market for over a year – finally attracted a buyer and all that was left was for the court to approve the sale.
- Once the Tuscany Lands sale is completed the Monitor’s next step is to complete the remainder of the District plan. This includes liquidating any remaining marketable securities, paying any taxes and fees due, transferring the remaining funds to the District creditors, delivering instructions related to the Representative Action to the District Representative Counsel, and then closing the District CEF bank accounts.
- The Monitor will then issue a Certificate for the District, DIL, ECHS, and EMSS plans to certify that they had been completed thus concluding the CCAA proceedings for these companies.
Long story short – the end of the CCAA proceeding is in sight.
Once the CCAA proceedings are completed I expect all the various stays to be lifted (Note 1). Once that happens, the curtain will rise on the next leg of this journey – namely the initiation of the CEF and DIL Representative Actions(Note 2).
And don’t forget – the ASC proceeding is still out there as well, though that’s a separate matter.
Note 1) When the CCAA process started all creditor lawsuits were “stayed” preventing them from moving forward.
The PWC website explains it so:
The process begins in the Court system when the company applies to the Court for protection under the CCAA. The Court will issue an Order giving the company 30 days of protection (often referred to as the “Stay”) from its creditors to allow for the preparation of the Plan of Arrangement. The Court can extend the Stay against the creditors upon further application to the Court by the company. Typically, the Court will continue the protection beyond the initial 30-day period if the company can demonstrate that it is likely that it will file a Plan of Arrangement and an extension of the Stay is not prejudicial to the creditors, as a whole. There is no time limit on how long the Stay can be extended. During the Stay period, the company will often continue operating, although it may commence restructuring activities at any time.
Note 2) A Representative Action is a legal proceeding where a community of investors sue the people and companies related to a wrongful action for financial redress.
Update 2019-04-24: Apparently I can’t subtract – it’s been four years since Jan 2015, not three years. Thanks to a reader for catching that.