Organic co-op files proposals to repay creditors

Thursday, July 30, 2015

by SUSAN MANN

Organic Meadow Co-Operative Inc. and its two related companies, Organic Meadow Ltd. and Organic Meadow Inc. filed proposals Wednesday with its trustee on repaying the millions owed to unsecured creditors. And those creditors will soon have a chance to vote on the plan.

Caryl Newbery-Mitchell, vice president of MNP Ltd., Organic Meadow's trustee, says the proposals have been submitted to the Office of the Superintendent of Bankruptcy. The creditors' meeting to discuss the proposals has been scheduled for Aug. 18 in Guelph.

The farmer-owned co-op, with more than160 members, has organic dairy, eggs, grains and processing vegetable businesses. It has been in existence for 25 years.

Organic Meadow has been under creditor protection since April 2 when its three companies each filed a Notice of Intention to make a proposal under the Bankruptcy and Insolvency Act. The companies had until July 31 to file proposals for unsecured creditors after receiving two extensions earlier this spring from the court.

Newbery-Mitchell says the proposals are not public documents and will be mailed to the creditors that are affected, along with an MNP report, at least 10 days before the meeting. The package will also include a voting letter and proof of claim form. Creditors can vote ahead of the meeting by returning the voting letter and proof of claim form to MNP, Newbery-Mitchell says. If the creditors reject the plan, the company is deemed bankrupt, she says. However, if the plan is accepted "then we have to get court approval." The company doesn't emerge from creditor protection until the proposal, if approved by creditors and the court, is implemented and its terms are fulfilled.

Michelle Schmidt, Organic Meadow marketing manager, says "we're optimistic that in the next month or so we'll be able to complete that creditor protection piece of our formal restructuring." Normally unsecured creditors don't get back all of the money they're owed and Organic Meadow board vice-chair Ted Minten says since this is the first time he's been through this process he couldn't say how much the co-op's creditors would be receiving. "I imagine it won't be the full amount," he notes.

Unsecured creditor Tony McQuail of Lucknow, who is owed $100,000 plus interest for a member loan he provided to the company about two years ago, is "looking forward to seeing what the proposal is." McQuail says the directors he has contacted "have been working hard on coming up with something that is fair to all of us."

Meanwhile, Schmidt would neither confirm nor deny Organic Meadow has been sold to Agrifoods International Cooperative Ltd. It's a Western Canada-based co-op with 2,480 members and more than 1,100 employees, according to its website. The co-op is owned by dairy processing giant. Saputo. Schmidt says "what I do know as it pertains to our partnership deals is there is a proposal that's pending, that is in process. Nothing has yet been finalized," she says, adding "I haven't heard any names specifically." The proposed partnership deal will enable Organic Meadow's members to continue to "play an active role in the new entity, whatever it is," she says.

Since Organic Meadow started its formal restructuring process in the fall of 2014 "we have been looking for a strategic partner. But there had never been any discussion with regards to being bought outright," she explains. Organic Meadow was looking to "move forward and to perhaps bring on one or two strategic investors that we can work with and be a stronger entity together."

Currently Organic Meadow management and staff are focused on running the business on a "day-to-day basis," she says. "The good news is, as we've gone through this process through the spring and now into the summer, things continue to improve."

Earlier this year, Organic Meadow officials noted that despite its more than 60 dairy farmers who are co-op members supplying 70 per cent of the organic milk for Ontario, the processor was short of milk for several months this winter and spring to make its cultured products. Minten says the milk supply situation has improved but there is still a shortage. "We're still behind but it's better than it was." BF