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The Telegram (St. John's)
Metro/Provincial News, Saturday, August 20, 2005, p. A3
Court
Decision Charts New Course for NDI
Baker, Jamie
A Newfoundland Supreme Court ruling on Friday will see a proposal to creditors by Nautical Data International (NDI) accepted, effectively ensuring the company's survival.
The decision, in conjunction with a previous ruling handed down in May, means the Department of Fisheries Oceans (DFO) will not be able to pull the plug on the company's contract.
NDI's lawyer, Tom Kendell, calls the ruling a victory of principle for the company and a sigh of relief for NDI's employees, who he says will now have jobs until at least 2008.
"There are 15 happy employees today that know their jobs are secure and they won't be shipping them off to Ottawa," Kendell told The Telegram. "Once it's approved by the court, this order, together with a previous order we have, means DFO cannot arbitrarily terminate the contract and that life goes on for NDI and its employees."
NDI, based in St. John's, and DFO signed a contract in 1993 that gave the company exclusive rights to distribute digital charts to all marine interests. On Jan. 4 of this year, the Canadian Hydrographic Service (CHS), a branch of DFO, terminated the contract effective Feb. 4. It was supposed to run until 2008, with a renewal option to 2013.
The termination lasted only a short time before the court ordered the contract reinstated.
On Feb. 2, NDI filed a notice of intention to make a proposal to creditors that would pay off its debts to creditors over a three-year period - a proposal 27 of the company's 29 creditors later green-lighted, with ACOA and DFO being the only exceptions.
Kendell alleged DFO and ACOA were conspiring to sink the company in an attempt to have the NDI work done in-house. He claims the amount of monies owed by way of outstanding royalties claimed by CHS was a higher amount than showed in the books of the company.
"They tried to do that to obtain more voting powers," he said. "ACOA attempted to do the same thing, although they had a more ridiculous argument than DFO had, trying to allege the monies they were owed were twice what they were legitimately owed ... it's just amazing.
"The judge passed an observation in his decision, when he said it was 'a very unusual turn of events' to have ACOA, aside from the fact they are supposed to be creating jobs, voting against a proposal that would've seen them paid," Kendell said.
The third issue addressed in the ruling was one surrounding Canadian Communications Ltd. (CCL), a small but important swing vote in accepting the proposal to creditors.
"(CCL) made a mistake when they sent their voting letter in - they forgot to check a box - and DFO and ACOA tried to argue, because they didn't check a box, you should bankrupt the company."
In his decision, Judge Robert Hall concluded, "to disallow the vote of CCL in this matter in my view constitutes a triumph of technicalities over substance."
Slim margin
As a result of the judge's decision, NDI's proposal, which needed 66.67 per cent creditor approval to get the go-ahead, will be accepted by the slimmest of margins - 66.71 per cent.
"I've never seen anything like that," Kendell said. "It's just incredible. ... I kept telling people a day of reckoning will come for the people that have done this against NDI."
The next step will be getting court approval of the proposal, which Kendell said should be merely a formality. From there, the three-year payment plan outlined in the proposal will kick into gear.
In the meantime, Kendell said, NDI will be "pursuing an action for damages against DFO for the grief that it's caused over the last seven months.
"DFO will not be able to interfere with this company for a three-year period so, hopefully by that time, some people with some common sense will start to exert some authority at DFO and get this thing straightened out."
jbaker@thetelegram.com
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