Officials from Pickseed were able to provide producers and others “with a greater comfort level”
Unsecured creditors of FarmPure Seeds have agreed to take a deal that may see them get back six cents on every dollar they’re owed by the Regina firm.
Pickseed, a well-known Ontario forage seed and turf-grass company that plans to buy FarmPure Seeds’ forage and turf seed business at Nipawin, Sask., has offered those creditors a $450,000 fund which, pending court approval, would go toward unpaid debts worth as much as $7.87 million.
A preliminary list of almost 500 potential unsecured creditors includes about 100 names of Manitoba-based farms, agencies, and businesses, including 30 to 40 seed growers. Manitoba creditors alone are owed sums ranging from a few dollars to almost $190,000, for a total of over $900,000.
Among other unsecured creditors listed are Bayer and Syngenta, who between them are listed as owed over $1.87 million.
Unsecured creditors voted largely in favour of accepting Pickseed’s offer at a meeting last Thursday in Saskatoon with officials from Pickseed, FarmPure and FarmPure’s trustee Naida Kornuta of financial services firm Meyers Norris Penny (MNP).
Kornuta said in an Oct. 23 interview that officials from Pickseed were able to provide producers and others “with a greater comfort level” about doing business with the company going forward if the Nipawin deal is approved.
Seed growers were much more positive about dealing with Pickseed but remain feeling burned over how much they’ll have lost.
Prior to the vote, creditors had asked about a further investigation to recover a greater percentage. But Kornuta noted it would be costly for creditors to investigate and the problem could either turn up nothing or find money that would go first to Pickseed as FarmPure’s remaining secured creditor, before unsecured creditors could lay claim to it.
Since FarmPure was only dealing in certified seed grown under contract, none of its debts to seed growers would be covered by the sort of security that licensed grain companies would otherwise post with the Canadian Grain Commission, she said.
Some growers, Kornuta said, were able to take back the seed they delivered to the company and thus limit the amount owed to them.
With the creditors’ vote past, Kornuta must now get court approval for Pickseed’s proposal, which will be at least two weeks away because creditors must get 15 days’ notice of that court hearing.
If the proposal is approved in court, unsecured creditors would then have 30 days to submit proof of their claims, to MNP. MNP’s fees will also be paid out of the fund.
Kornuta said it’s possible that creditors may get back more than six cents on the dollar in dividends depending upon how many claims come forward.
Under its proposal, Pickseed becomes FarmPure Seeds’ lone secured creditor by buying out the secured status of the two top secured creditors, the Royal Bank and Farm Credit Canada. That deal, pending court approval, would see RBC and FCC get back 85 per cent of the $4.1 million owed them.
FarmPure Seeds formed in the 1990s through the merger of Value Added Seeds and Performance Seeds into Quality Assured Seeds, a firm owned by about 200 pedigreed seed growers. It was renamed FarmPure Seeds in 2005.
MNP’s review of FarmPure Seeds describes a company that undertook “rapid expansion without adequate market analysis and without the necessary managerial support and expertise to successfully manage a corporation with this diverse and complex an operation.”