Receiver appointed for Mitchell pork processor

Thursday, June 12, 2014

by SUSAN MANN

A June 10 court order in response to an application by Farm Credit Canada has appointed a receiver for the Mitchell-based Great Lakes Specialty Meats of Canada Inc.

The application was filed in Ontario Superior Court of Justice in London. PricewaterhouseCoopers Inc. (also referred to as PwC) has been appointed the receiver of all of the assets, undertakings and properties of Great Lakes Specialty Meats and 2268204 Ontario Inc. The two businesses consented to the appointment of PwC as the receiver, the court documents say.

Officials with Great Lakes Specialty Meats couldn’t be reached for comment.

Trevor Sutter, Farm Credit spokesperson, says “FCC can’t comment in any way on this because of customer confidentiality.”

PwC didn’t respond to a request for information in time for this posting. But a notice on its website says a notice and statement of the receiver will be mailed to all creditors of Great Lakes Specialty Meats within the next 10 days.

The plant, which had been processing about 5,000 hogs a week during the past few weeks it was open, hasn’t been accepting hogs since June 2. Employees were told not to report for work for two weeks, which included last week and this week, according to the workers’ union representative, Tim Deelstra of the United Food and Commercial Workers Union.

Ontario Pork chair Amy Cronin says Ontario Pork officials were at a meeting of creditors for Quality Meat Packers Ltd. and Toronto Abattoirs Limited of Toronto to appoint which creditors will be overseeing the bankruptcy proceedings for those companies when they learned Great Lakes Specialty Meats wouldn’t be accepting hogs as of June 2. She adds that Ontario Pork, representing all hogs farmers in the province, will be one of the creditors overseeing the Quality Meat Packers bankruptcy.

Quality Meat Packers and Toronto Abattoirs Limited ceased operations and sought court-ordered creditor protection April 3. The companies have since declared bankruptcy.

Great Lakes Specialty Meats and Quality Meats are owned by the same person, David Schwartz, but were operated as two separate companies.

About the problems at Great Lakes Specialty Meats, Cronin says “I know that they (Great Lakes Specialty Meats) have lost their ability to ship into Russia because there were some issues that they had and they didn’t renew their license to ship into Russia, and so given that is such a high proportion of what they do at that plant, they needed to stop taking hogs immediately.”

Cronin says “it’s definitely unfortunate for our industry to lose another packer at this point.” But farmers who shipped to the Mitchell plant have all been paid for their pigs. Ontario Pork had been offering a service where Great Lakes Specialty Meats was putting money into an account at Ontario Pork and the organization “would then assure farmers there was money there for the hogs that they were shipping and then they would go ahead and ship pigs.” That service was available for all producers under Ontario Pork’s universal services.

“We felt that our industry needed the assurance that it was safe to ship,” she explains. “We wanted to be sure that we wouldn’t end up with producers not being paid like they were with the Quality Meats situation.”

For farmers who weren’t paid for pigs shipped to Quality, those that shipped through Ontario Pork’s marketing division received some compensation that was based on whether the farmer was a “pool shipper, pool plus shipper or a direct contract shipper shipping through the marketing division,” Cronin says. Farmers received compensation of between 50 and 60 per cent of what they were owed by Quality.

All of those farmers who shipped through Ontario Pork and were owed money by Quality have now been paid by the Ontario Pork marketing division, she says. The funds used to pay them “are funds that have been accumulated within the division since Dec. 4, 2010. It’s not like it was universal services funds that were used to compensate producers that shipped through the marketing division.”

The money used for compensation was “specifically accumulated within the division since the separation of universal services and the marketing division took place Dec. 4, 2010,” she explains. The money came from a surplus from the 65 cents per hog fee farmers pay to use the marketing division and the division’s forward pricing program.

Ontario Pork hasn’t totally depleted the fund by paying the farmers’ compensation. “We just thought it was a good business decision to ensure that there were funds remaining in there,” she says.

Currently, she says she hasn’t heard if another person or company is interested in operating the Mitchell plant. “That doesn’t mean that there’s not, it’s just not something that I’m aware of at this time.”

Pigs that were going to Mitchell have been redirected to Quebec and the United States. But Cronin says she can’t say exactly where in the United States “because not all of those pigs are shipped through Ontario Pork’s marketing division.”

But Cronin says the closure of Great Lakes Specialty Meats means the industry will have to determine where “the home is for those pigs in the future.” There are currently two federally registered packing plants left in Ontario “but we also have provincial processors and abattoirs as well and they’re also an important part of our industry. It’s not like we only have two packers. There are more.”

For pigs going to the Untied States, Cronin says “in the past we’ve always depended on the Packers and Stockyards Act in the States” in the event a U.S. packing plant goes bankrupt and farmers haven’t been paid. That legislation will continue protecting producers “at this time,” she notes, but farmers have responsibilities to report if they haven’t been paid.

PwC says on its website the receiver is appointed to take possession of and sell or liquidate the assets secured by a security agreement in order to repay outstanding debt. “A receivership is a remedy available to secured creditors to recover amounts outstanding under a secured loan in the event the company defaults on its loan payments,” the website says. BF