It’s… How do I put it? overwhelming? annoying?
It is understood that the company that accommodates the elderly has suffered from the effects of the epidemic. It is also understood that she lives hard on interest rate increases when she has $1 billion in debt. Let inflation and labor shortages hurt it, okay.
But Groupe Sélection management’s inability to explain how the tens of millions of dollars lent was spent is beyond comprehension.
Imagine that leaders are not able to know how much money is spent per month on each construction project, nor even determine the rate of participation in each project, expert Christian Burke said Wednesday in court.
“Amazing thing. I’ve never seen this before in my career […] “It is incomprehensible and unacceptable that a company the size of the Selection Group is unable to provide such reliable background information,” said PwC’s head of restructuring, commissioned by the Banking Syndicate.
Mr. Burkie has come to explain his report to the court, which details the problems of the Selection group. He’s followed the company down the road in recent months, as an agent for banks.
It is he who will act as controller of the Groupe Sélection if Judge Michel A. Pinsonnault worked with creditors instead of Real Estate Agent Poquelin to coordinate the judicial restructuring of the organization.
According to Christian Burke, Selection’s financial forecasts sometimes confuse accounting profits with self-generated money. However, discrimination is a key concept in accounting and is crucial in construction projects. In addition, management could not determine the level of accounts payable by project.
“Financial ability was so disorganized, so lacking in skill, as if its owner wasn’t a priority [Réal Bouclin] “, He said.
The company had a high turnover rate in its finance department. In particular, it has had three CFOs for three years and has experienced many liquidity crises.
Mr. Burke estimates that the company has a cash flow shortfall of $7 million a month. The deficit is due to the operating deficit in senior housing (2 million per month) and the large liquidity needs of the five construction projects in progress (Espace Montmorency, Molson land, etc.), among others.
To clarify the situation, Christian Burke asked several times to meet with the owner, Real Bucklin, but he was sent by the businessman to his subordinates.
I only met the president last week [dans les bureaux de la firme d’avocats des créanciers, Norton Rose]. In my 33 years of experience, this has never happened to me.
The accountant came to explain that the bank financings in May 2020, May 2021, and February 2022 were all centrally conditional on the company selling real estate as a means of payment, with insufficient profits to pay off.
Time passed, the epidemic reduced the housing occupancy rate, and interest rates rose, causing the value of the buildings to decline, so that the company could not honor the sales plan. Despite this losing streak, the company continued to prepare costly new real estate projects.
Today, bank financing is 272 million, to which first mortgage loans are added arranged on residences, among others. Since the 272 million is basically secured from the net value of the buildings (the capital part) and this value – which is about 400 million – has evaporated, the banks will lose a lot in this case.
Also according to his report, Christian Burke confirms that due to the absence of cash generated by the company’s activities for 18 months, the 136 million capital it invested in projects actually comes mainly from bank financing.
Another inconvenient fact: Selection has set aside 14 million to pay tax on the only transaction it was able to make, in 2021, an amount that was due to be paid to the tax authorities before June 2022. However, nearly half of that amount has been used for other purposes. .
Today, none of the six financial institutions (Nationale, CIBC, Desjardins, etc.) support Real Poquelin, nor its other lenders, nor Investissement Québec, nor its construction partners (Montoni, Fonds FTQ).
It’s not a liquidation, sir, it’s a divorce. Partners and creditors no longer wish to play with Mr. Bucklin, nor believe in him.
In cross-examination, attorney Jay B. Martell, of Stickman Elliott, points out that Christian Burke’s report leans toward liquidation pure and simple, rather than restructuring, as stated in his testimony, which the accountant expert denied.
In this regard, the creditors appointed, at the beginning of the morning sessions, an attorney representing 15,000 residents of the old-age homes and other buildings, to show their intention to treat the residents well.
Another attack by Me Martel: Why didn’t Christian Burke release such a negative report last February when Sélection received another $50 million in bank funding? The accountant replied that it was another form of reporting, basically.
Finally, the lawyer asked if his plan did not mean a definitive halt to the work in progress. Mr. Burkie replied that he would see what to do after more in-depth analyzes of the situation if he was granted the mandate of the observer.
Isn’t this story amazing?