Recently “Repicheep” on the CEF Investor’s Forum asked Deloitte where things were given that the parsonage lot and the Tuscany properties since both been sold and the funds were still waiting to be distributed.
Joseph Sithole at Deloitte responded as follows:
The Alberta securities commission settlement is the reason why the final distribution has been delayed. This settlement will be distributed with the funds in trust from the sale of the properties.
A court date for approval of the final distribution is planned for the end of October. Distributions would be sent a few weeks thereafter. We will have a report prepared in advance of the court date, which will include further details on the final distribution.
While this is certainly good news, I’d like to add a bit to this story.
If one reads Deloitte’s thirty-seventh report dated Apr 18, 2019, you would see that Deloitte had found a buyer for the Tuscany property, that the conditions had been removed, and they were applying to the court to approve the sale with a hearing date scheduled for April 25, 2019.
Assuming the sale completed in May 2019 the monitor would be holding a bit over $3M of depositor funds at that time.
The ASC case was originally scheduled to start in May 2019. If the case had been settled in May 2019 instead of three months later in Sept 2019, the fines could been paid to the Monitor, court approval sought and obtained, and the distribution made sometime in June or July 2019 instead of some three to four months later in November 2019.
Why is this important? Because every month this drags on is another month the depositors do without their money. It’s also another month the Monitor is charging professional services fees the same way an idling engine burns fuel.
How much are those fees? Going from memory(1) – when things were quiet the various fees came in at around $14K / month.(2)(3) Since things have been really quiet waiting for the ASC case to complete I’ll assume the professional services fees came in at ~$10K / month. That means the three-four (3-4) months Encharis delayed things cost the depositors an estimated $30K to $40K in professional services fees to the Monitor.
And if the Encharis petitioners had gotten their way, who knows what the depositors would’ve had to pay in services waiting for the CCAA process to complete and the Monitor to be discharged.
Fortunately that didn’t happen, and now we’re that much closer to finishing the CCAA process and putting this chapter behind us.
- I’m going from memory because asking Deloitte for a more precise answer could cost the depositors a couple hundred dollars in fees. I’ll be updating this post with updated numbers after Deloitte releases its next report.
- Why so much? Professional services at this level start around $250 / hr and go up from there. At this rate of billing $10K only pays for 40 hours of time at most.
- Compare this with the time the “dissident group” managed to adjourn the meeting to vote on the plan before the vote was completed. By the time the meeting had reconvened and the original plan approved, $300K in depositor money was consumed by professional services fees that could’ve been avoided if the plan had been approved at the original meeting.