On July 26, 2024, BC Tree Fruits Cooperative announced that its Board of Directors had unanimously determined that due to extremely low estimated fruit volumes, weather impacts and difficult market and financial conditions, the Cooperative would not be able to effectively operate its business going forward. On August 6, 2024, the Canadian Imperial Bank of Canada issued a demand for repayment and notices under section 244 of the Bankruptcy and Insolvency Act with respect to the indebtedness currently due and owed (the “Indebtedness”) of BC Tree Fruits Cooperative and its subsidiaries Growers Supply Company Limited and BC Tree Fruits Industries Limited (collectively, “BCTFC”).
In order to downsize or liquidate the Cooperative and thereby maximize recovery for all parties, BCTFC filed for creditor protection under the Companies’ Creditors Arrangement Act (“CCAA”) in the Supreme Court of British Columbia on Monday, August 12, 2024. The interim order hearing is scheduled for August 13, 2024 at 10:00 a.m. before the Honourable Justice Gropper. At this hearing, BCTFC is seeking, among other things, a stay of all proceedings and appeals against BCTFC for 10 days, the appointment of Alvarez & Marsal Canada Inc. as BCTFC’s court-appointed representative (the “Monitor”), approval of interim financing and the scheduling of a comeback hearing for August 23, 2024 (the “Comeback Hearing”).
background
The decision to seek creditor protection is due to the BCTFC’s current liquidity crisis. As noted above, there are many factors that have led to this crisis, including declining fruit volumes, increased competition from local packhouses, aging facilities and equipment, pricing pressures in the local market and in Washington State, a decline in BCTFC contract growers/members, and significant impacts from climate change.
Since the merger of several cooperatives in 2008 to form the current company, numerous BCTFC boards and management teams have attempted to right-size the company. Although this was unpopular with a portion of the membership, a consolidation plan was launched in 2022 to modernize equipment and divest from outdated, under-utilized land. The goal was to increase efficiency and reduce overhead costs so the cooperative could get growers more money for their crops. Unfortunately, this was met with multiple attempts to block land sales, make board changes, or change board leadership through demands that resolutions be heard at special general meetings and other actions. These disruptions delayed planned land sales and timing of equipment installation, reducing growers’ potential returns for the 2023 and 2024 crops.
The final turning point in BC Tree Fruits’ already precarious financial position was the unexpected and significant crop decline due to the unusually severe weather pattern in 2024. As a result, the 2024 crop saw an 85-90% volume decline in cherries and all other stone fruits were reduced to zero due to these weather events. Shipped apple volumes, BCTFC’s main commodity, had already declined in previous years, but the estimated volumes BCTFC received from apple growers in July for the 2024 crop were staggering. The numbers showed a decline in forecast apple volumes of approximately 50% from 2023 levels, significantly less than expected. The low forecast apple volumes were partly due to weather impacts, but were heavily driven by disunity among growers. The Board and management recognized that, given the operating, transportation and borrowing costs, the delayed land sales and the significantly reduced fruit volumes, BCTFC would no longer be able to meet its overhead requirements, pay its growers or repay its debts.
The announcement of the closure on July 26, 2024 was very regrettable, but was made to give producers the opportunity to find other ways to package and market their fall fruit.
Next Steps
At the Comeback Hearing scheduled for or about August 23, 2024, BCTFC will seek approval for a sale and investment solicitation process for BCTFC’s assets, as well as any further and other relief that may be required.
Contact:
Laurel Van Dam
BC Tree Fruits
Phone: 250-808-0928
(email protected)
www.bctreefruits.com
