By the time the grant was announced, the company had gone out of business
Thursday, September 1, 2016
by SUSAN MANN
A lot can happen in two years.
That’s roughly the amount of time that lapsed between the last payment a Toronto-area dairy company received from a provincial grant and when the grant was publically announced.
And within that two-year period, Canadian Dairy Manufacturing Inc. went into receivership and ceased operations.
On Aug. 24, the Ontario and federal governments together announced a $45,000 grant to the company for market research to develop infant formula exports to the Chinese market. At the event held at Select Food Products Ltd. in North York, the two levels of government handed out more than $4.6 million for 110 projects being undertaken by processors and beverage manufacturers in the Greater Toronto Area, including the one for Canadian Dairy Manufacturing.
The grants were issued under the Growing Forward national agricultural policy framework.
Ontario Agriculture, Food and Rural Affairs Minister Jeff Leal and Agriculture and Agri-Food Minster Lawrence MacAulay said in a press release the funding would help the companies “implement sustainable technology to expand production to meet consumer demand.”
Christina Crowley-Arklie, Leal’s press secretary, said by email Canadian Dairy Manufacturing submitted an application for funding in November 2013. The project was approved in late December 2013.
“The final claim was paid to the company in April 2014 once the company demonstrated it had successfully completed the project,” she said.
Three months later, the company’s shareholders became embroiled in a major legal dispute. And 11 months after receiving the final payment under the grant, the company was forced into receivership.
GF2 processing grant highlights
by SUSAN MANN
The implementation of looming trade deals, like the one between Canada and the European Union led Quality Cheese Inc. to conclude it had to improve its cheese production processes, says co-owner Albert Borgo.
“We knew we had to step up our process and improve efficiencies, yields and quality,” Borgo said. “If we wanted to grow, we had to do that.”
The company recently built a new 60,000-square-foot plant in Orangeville to manufacture Brie cheese in addition to the cheeses it makes at its existing Vaughan facility. And now Quality Cheese has received a number of grants for projects at the new plant through Growing Forward 2, the national agricultural policy framework.
The projects Quality Cheese is undertaking, with about $98,000 in Growing Forward 2 grants, include assessments of human resources and work processes, an engineer’s assessment to optimize energy savings, a workforce development plan, on-site food safety training by a third party and an assessment of strengths and weaknesses and opportunities and threats to the business.
The improvements will help the company produce products more competitive with European imports. As part of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), European-member countries will be able to ship a total of 31,971 tonnes of cheese to the Canadian market beginning next year.
That amount more than triples the cheese that EU countries can currently ship tariff-free to Canada.
As part of the Growing Forward 2 funding, Ontario Agriculture, Food and Rural Affairs Minister Jeff Leal and Agriculture and Agri-Food Minister Lawrence MacAulay handed out more than $4.6 million for 110 projects being done by food and beverage processors in the Toronto region. The funding was announced in North York on Aug. 24.
Leal said in the government press release the funding will help the businesses become more competitive and grow to expand their markets in both Canada and globally. MacAulay said the funding would help the businesses stay ahead of modern technologies and consumer trends.
Another company getting funding was Select Food Products Ltd. in North York. It received $350,000 to help it implement a resource planning system that’s designed to track shipments, manage the warehouse, trace all product ingredients, do customer invoices, purchasing, scheduling and keep track of the company’s financial details.
The company makes sauces, salsa, mustards, mayonnaise products, salad dressing and liquid-based gravy in cans. Starting next year, Select Food Products will make French’s ketchup with tomato paste purchased from Highbury Canco in Leamington.
The ketchup will be sold in Canada.
Some other companies getting grants are:
- Gay Lea Foods Co-operative Limited, $100,000* for training programs.
- St. Andrew Poultry (Ontario) Inc., $100,000 for various projects.
- ShaSha Bread Company Inc., $100,000 to buy equipment, provide training and conduct marketing initiatives.
- ADP Direct Poultry, $100,000 for equipment upgrades.
- Kingsmill Foods Company Limited, $300,000 for equipment upgrades.
- The Natrel division of Agropur, $125,000 energy and automation updgrades. BF
(*Numbers are rounded.) |
It’s unclear why the two levels of government announced the $45,000 in funding for Canadian Dairy Manufacturing almost two years after the final payment was made.
The federal government declined to comment with an Agriculture and Agri-Food Canada spokesman saying in an email it’s the Ontario agriculture ministry that can answer questions about the recipients and projects being funded.
Crowley-Arklie didn’t respond to questions about that in time for this posting.
The Canadian Dairy Manufacturing shareholder dispute concerned an unrelated property in Port Perry, said Charles Wagman, of the Wagman Sherkin law firm in Toronto. Wagman was the lawyer for Canadian Dairy Manufacturing and Maple Dairy Inc., a related company, and is now the lawyer for Eaton Chen. Chen’s family had the majority of shares in Canadian Dairy Manufacturing.
Other shareholders launched four lawsuits, he said. The first was filed in July 2014. The courts dismissed three. The fourth lawsuit, filed in May 2015, is ongoing but Wagman said the case’s judge has dismissed motions to freeze Chen’s assets and to declare the Canadian Dairy Manufacturing the owner of the Port Perry property.
BDO noted in its reports to the court that the shareholders initiating the complaints included Sai-Min Lam and the listed numbered companies. Court documents say the group alleged that about $8 million of the company’s funds were diverted to accounts controlled by the majority shareholders, the Chen family, or otherwise unaccounted for.
The allegations have not been proven in court and Wagman vigorously denied the allegations on behalf of his client.
"They've lost four times," he said of the legal actions the Canadian Dairy Manufacturing shareholders initiated, including court motions in the one remaining lawsuit. "Each time the judge said they were wrong."
Canadian Dairy Manufacturing (CDM) went into receivership about a year ago. The company held a $7.5 million loan from HSBC Bank Canada; the bank couldn’t get the company’s shareholders to agree on how they’d repay the loan, according to reports by the court-appointed receiver, BDO Canada Ltd. The Ontario Superior Court of Justice appointed BDO as the receiver in March 2015.
Prior to going into receivership, the shareholder officials with Canadian Dairy Manufacturing didn’t make any payments on the $7.5 million loan for about six months, the BDO reports said.
The reports said Maple Dairy owned the property on Coronation Drive in Toronto where the formula was to be manufactured. Both companies had their head offices at the Coronation Drive location. Maple Dairy also went into receivership.
Wagman said the building on Coronation Drive was sold in December 2015. The two companies still exist but are still in receivership, he said.
Eaton Chen is setting up a similar venture to manufacture infant formula for the Chinese market in Brockville. That company is called Canadian Milk Manufacturing Inc., Wagman said.
Wagman said the lawsuit is in limbo. The two sides have exchanged the statement of claim and statement of defense. “The next step is to produce documents, it’s called an affidavit of documents. We did it, and they just haven’t.”
The documents are due by Sept. 15, he added. However, he hasn’t heard from the Lam side’s lawyer after sending him a timetable in July outlining when events within the lawsuit should occur.
BF