Farmers who delivered to Prairie pulse and grain processor ILTA Grain but didn’t get paid before the company went into creditor protection are being asked to “immediately” get in touch with the Canadian Grain Commission.
The CGC late Wednesday announced it has reached an agreement with the company’s court-appointed monitor for a new escrow account, “into which funds will be placed that relate to grain deliveries for which no cheques have been issued.”
That fund is to be held by the monitor, PricewaterhouseCoopers (PwC), “until it has been determined how the funds will be distributed,” the CGC said in a release.
The commission said Wednesday it has heard from “more than 200” farmers as it completes its audit of the number of farmers to whom ILTA owes money for grain, and the total amount of those claims.
In negotiating to set up the escrow account, the commission said it agreed to reinstate B.C.-based ILTA’s grain dealer and primary elevator licences effective Wednesday. Those licences had been suspended on July 11.
One of the “key conditions” of the agreement, according to CGC chief commissioner Patti Miller, prevents ILTA from buying or receiving more grain from farmers or otherwise incurring liabilities to grain growers.
However, ILTA “may sell, remove or otherwise transfer grain or grain products held or stored at its facilities.”
In its Aug. 1 report to the Supreme Court of British Columbia, PwC said the company lists about $24 million in inventory out of about $224 million in assets such as its buildings and equipment.
ILTA owed about $152 million to creditors, including about $14 million to farmers, as of July 8, the date it got court approval for creditor protection.
CGC-licensed grain companies must tender security for outstanding grain liabilities, either as a bond, letter of credit, letter of guarantee, cash deposit, trust account or payables insurance.
ILTA’s licenses required it to provide security of $12 million against what it owes to farmers, which PwC said are covered under an insurance policy with the Canadian arm of Atradius, the Dutch trade credit insurance firm. Atradius had filed a notice of cancellation of that policy on July 9 but has since agreed to reinstate it, PwC said.
Furthermore, PwC said, it had been informed July 19 that the CGC identified elevator receipts worth about $2.9 million for which producers hadn’t been paid as of July 8.
PwC, in its Aug. 1 report, said it understands that HSBC Canada — one of ILTA’s secured creditors — and the CGC “may have different views as to the entitlements to the grain,” hence the negotiations which led to the setup of the new escrow account.
The CGC said Wednesday it will contact “any producers who have reported payment issues” and will send claim forms to those producers to sign and return “as soon as possible,” once it confirms their contact information.
Also, the CGC said, any farmers who haven’t yet contacted the commission, but who delivered to ILTA before July 11 and haven’t received payment should “immediately” contact the commission at 1-800-853-6705.
In cases where a CGC-licensed company doesn’t meet its payment obligations, the commission uses the company’s security to compensate eligible farmers, the CGC said, but emphasized that the Canada Grain Act “does not guarantee full payment in the event that a licensed company fails.”
“We have taken several steps to protect the rights of producers who have delivered to ILTA Grain Inc. including visits by our auditors and inspectors to obtain information and documentation, starting the claims process, and negotiating an escrow agreement,” Miller said in Wednesday’s release. — Glacier FarmMedia NetworkTagged Atradius, canadian grain commission, CGC, creditor protection, escrow, grain dealer, HSBC, Ilta Grain, licences, primary elevator