Quebec pork failure hits Ontario producers

Thursday, February 25, 2010

by SUSAN MANN

Financially troubled Quebec pork producer Les Elevages B & F Boulay, now under court protection from creditors, has failed to pay Ontario producers for more than 20,000 weaner pigs.

Boulay of Saint-Cesaire was $14.3 million in debt when brothers, Bruno and Francois Boulay, put their business under the protection of the Bankruptcy and Insolvency Act at the end of January. The company has 27 employees.

Neither trustee Benoit Fontaine of Raymond Chabot Inc. nor Boulay employee Pierre Troalain returned calls.

The Boulays blamed their financial troubles on the pork industry crisis and reduced provincial stabilization insurance payments, according to French-language newspaper La Voix de l’Est based in Granby.

The trustee’s documents showed secured creditors are owed about $7.3 million, while unsecured creditors are owed about $6.6 million. Company assets are listed at $6.5 million.

Several Ontario companies are on the unsecured creditors list filed on the web site of the bankruptcy trustee. Those companies and the amounts they’re owed include, Maximum Swine Marketing Ltd. of Mount Brydges ($127,840), GreenField Ethanol Inc. ($21,564.45), Stonehouse Farms, also listed as 2059520 Ontario Limited of Lucan ($301,657.80), and Birnam Pork of Watford ($130,919.96).

The biggest creditor is on the secured creditor’s list, La Banque Nationale du Canada (slightly more than $5 million). Also on the secured creditor’s list is the Federation des producteurs de porcs du Quebec ($400,000). 

Stephanie Fortin, public adviser with the Federation, declined to comment on the matter.

GreenField spokesperson Debra Conlon says she can’t confirm the amount they’re owed by Boulay or what the money is owed for.

“They were a really good customer of ours,” Conlon says. “We wish them well during this time period and we hope to do business with them again.”

In the case of livestock brokerage firm Maximum Swine, spokesman Dan Goodhue says they’re actually owed more than the $127,840 listed in the trustee’s documents. The amount is closer to $150,000. Maximum Swine hasn’t been paid since last May according to Goodhue.

Maximum Swine sued Boulay in an Ontario court and received a judgment against the company. “We were trying to collect on our judgment when they got the creditor protection,” Goodhue says. 

In this case, Maximum Swine delivered piglets to Boulay over a two-week period. As soon as the last ones were delivered, Boulay phoned Maximum and said they wouldn’t be able to pay right away. “In our opinion they knew all along they had no intention of paying for those pigs. They paid for some of them and that was it.” 

Goodhue says all their farmer suppliers, who come from all across Canada, were paid by Maximum even though Boulay didn’t pay them. Maximum has dealt with the financial loss and the company won’t be going out of business because of the loss.

Goodhue says Maximum Swine periodically sold piglets to Boulay in the past. “We did not have a contract or anything like that. We filled spot market orders for them.”

Maximum Swine didn’t know the company was in financial trouble when it sold them the piglets last May. 

Goodhue says there isn’t a way to know if a company won’t pay its bills even if a business does due diligence before entering into an arrangement. “This type of business is based on trust.”  

At a creditors’ meeting Wednesday at the St. Christophe Hotel in Granby unsecured creditors mostly agreed to the company’s proposal to pay $538,000 of the $6.6 million owed to them. About 60 people were at the meeting.

There are more than 120 unsecured creditors, says Jacinthe Fritsch of Upton, Quebec. Her husband, Claude, was at the meeting. The Fritschs are unsecured creditors who are unhappy with the Boulay proposal. Jacinthe says they used to rent a barn with space for 5,000 pigs to Boulay and are owed more than $110,000 even though the trustee’s documents show they’re only owed $27,000.

Many of the unsecured creditors are owed $500 and less, she says. At the start of the creditors meeting people were told by the trustee the proposal was already accepted by more than 84 per cent of the creditors and was therefore approved. It still has to be ratified by a judge of the Superior Court of Quebec. 

Fritsch says they didn’t receive any documents at the meeting to confirm the acceptance rate of the proposal “it was only the word of the trustee.”

Fritsch and at least six other unsecured creditors are preparing a complaint to be filed with the federal Office of the Superintendent of Bankruptcy Canada, which oversees trustees. “We don’t believe what the trustee told us. We didn’t see any papers and we didn’t see any numbers,” she says.

All unsecured creditors are to get a $500 cheque within a month. The rest of money is to be distributed proportionally according to the amount of each person’s claim in two installments, according to an article in La Voix de l’Est.

Fritsch says they’re only expecting to get about two per cent of the more than $110,000 that is owed to them. She notes that while her family will still eat, they won’t be going on any vacations for a few years. But some Quebec farmers on the list of unsecured creditors will lose their farms.

In an emotional appeal, Fritsch urged people to be careful when dealing with companies buying their products.   

Questions about the company’s financial troubles and how they have been handled remain. “How come the National Bank doesn’t have verified numbers and they lent them more than $6 million,” she asks.

Along with those concerns, Fritsch says the Boulays’ financial difficulties are more severe than have been stated. She says the company owes more than $15 million and all the amounts listed on the trustee’s documents that were owed to people were lower than what they should be. Some people haven’t been paid by Boulay since 2006 Fritsch says

Fritsch says they’ve been asking for Boulay’s financial numbers to be verified by an outside accountant. “We just want to know where the money went.”

La Voix de l’Est is reporting that the Boulays plan to continue producing pigs but reduce their numbers from 100,000 pigs to 40,000. BF