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 effects, and difficult market and financial conditions, the cooperative will not be able to effectively operate the business moving 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 in respect of the debt currently due and owing (the "Indebtedness") by 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 in an effort to maximize recovery for all stakeholders, on Monday, August 12, 2024, BCTFC filed for creditor protection in the British Columbia Supreme Court pursuant to the Companies' Creditors Arrangement Act ("CCAA"). The hearing of the initial order in the proceeding is scheduled for August 13, 2024, at 10:00 am before the Honourable Madam Justice Gropper. At this hearing, BCTFC seeks, among other things, a stay of all proceedings and remedies against BCTFC for 10 days, the appointment of Alvarez & Marsal Canada Inc. as the court-appointed officer (the "Monitor") of BCTFC, the approval of interim financing, and the scheduling of a comeback hearing for August 23, 2024 (the "Comeback Hearing").
Background
The decision to file for creditor protection stems from BCTFC's current liquidity crisis. As noted above, there are many factors that have led to this crisis, including decreasing tree fruit volumes, an increase in local packing house competition, aging facilities, aging equipment, market pricing pressures locally and from Washington state, a reduction in contracted BCTFC growers/members, and significant impacts from a changing climate.
Since the 2008 amalgamation of multiple cooperatives into the entity it is today, numerous boards and management teams of BCTFC have attempted to "right size" the business. Though unpopular with a portion of the membership, in 2022, a consolidation plan was launched to modernize equipment and divest of aging underutilized properties. The goal was to increase efficiencies, and reduce overhead costs, enabling the cooperative to get growers more money for their crops. Unfortunately, that was met with multiple attempts to block property sales, make board changes, or change board governance through demands for resolutions to be heard at Special General Meetings and other actions. These disruptions delayed the planned property sales and the timing of equipment installation, which reduced the potential grower returns for the 2023 and 2024 crop.
The final tipping point in the already precarious financial position of BC Tree Fruits was the unexpected and significant crop reduction caused by unusually severe weather pattern in 2024. As a result, the 2024 crop saw a reduction in volume by 85-90% in cherries and all other stone fruit were reduced to zero due to those weather events. Received apple volumes, the largest commodity of BCTFC, had already been dropping over the preceding years but the estimated volumes provided in July to BCTFC from apple growers for the 2024 crop was staggering. The numbers showed about a 50% reduction in projected apple volumes from the 2023 level, significantly less than expected. The low projected apple volumes were somewhat due to weather impacts but were strongly driven by grower discord. The Board of Directors and Management realized that with the operating, carrying, and debt costs and in the face of delayed property sales, coupled with significantly reduced fruit volumes, BCTFC would no longer be able to meet its overhead requirements, pay its growers or repay its debts.
The July 26, 2024 announcement of the closure was very unfortunate, but was done to give growers the opportunity to find other avenues to pack and market their fall harvest fruit.
Next steps
At the Comeback Hearing planned for on or about August 23, 2024, BCTFC will seek approval of a sale and investment solicitation process for the assets of BCTFC, and for such further and other relief as may be necessary.
Contact:
Laurel Van Dam
BC Tree Fruits
Tel: 250-808-0928
[email protected]
www.bctreefruits.com