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The Telegram (St. John's)
News, Friday, July 15, 2005, p. A1
Court
Trustee Says NDI Proposal Fair
Callahan, Brian
A seasoned international bankruptcy trustee said Thursday he was "surprised" ACOA rejected a St. John's company's proposal to creditors.
"In my opinion, this is an adequate ... fair proposal," Andy Wilczynski, a senior trustee with PriceWaterhouseCoopers in Toronto, told Newfoundland Supreme Court Justice Robert Hall.
Wilczynski has been appointed the trustee in the bankruptcy of Nautical Data International (NDI), and is overseeing the proposal to creditors.
Twenty-seven of NDI's 29 creditors have voted for it; only ACOA (Atlantic Canada Opportunities Agency) and the federal Department of Fisheries and Oceans (DFO) voted against.
That would have been enough to kill the restructuring proposal and finish off the company.
But NDI lawyer Tom Kendell was able to secure a last-minute court order to suspend the vote and challenge ACOA's motives in court.
Wilczynski said opposition by DFO, which illegally terminated its 12-year-old contract with NDI in January, might be understandable; NDI says that's what forced the company to file for bankruptcy in the first place.
But Wilczynski, who recently oversaw the $6-billion restructuring of a Brazil-U.K. firm, was seemingly at a loss to explain ACOA's reticence.
Kendell alleges ACOA and DFO teamed up and conspired to scuttle NDI so the feds can take over the company's lucrative contract and do the work in-house.
Wilczynski said he questioned ACOA about its reservations in a letter last week, but didn't receive a formal reply.
"There was no written response, but I did get a verbal response this week ... that they'd be willing to discuss the matter after I complete my testimony," Wilczynski said.
"But they're not willing to talk to you before then?" Kendell asked.
"I presume not," Wilczynski replied.
That's in stark contrast to another creditor which had concerns with the proposal but approached the trustee about it. The proposal was subsequently amended and that creditor has since voted in favour, Wilczynski confirmed.
"Have you ever received a request from ACOA for an amendment?" Kendell asked.
"No," the trustee said, adding ACOA never expressed any concerns to him.
Wilczynski also described the NDI proposal as "better than most" since it offers creditors at least a 100 per cent return on what was owed.
"So, this is uncharted territory for you then," Kendell said.
"I think it's uncharted territory for a lot of people," Wilczynski replied.
"We give a fair bit of latitude with these proposals. We don't like to see companies fail."
In 1993, NDI and DFO signed a contract that gave NDI exclusive rights to distribute ground-breaking digital charts to all marine interests, from fishermen to scientists.
But on Jan. 4 of this year, the Canadian Hydrographic Service, a branch of DFO, terminated the contract.
DFO claimed there were "many serious difficulties" with the agreement that resulted in "a very large number of complaints from the boating community, the industry and other government departments."
The situation continued to deteriorate, DFO said, and the minister was forced to sever the agreement, which was to run until 2013.
That was illegal, a Supreme Court judge ruled in May.
If Hall rules ACOA's rejection of the proposal is unjust, NDI would have enough votes for it to pass and the company would survive.
More evidence was expected in the case this morning.
bcallahan@thetelegram.com
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