San Group of Companies, which owns two sawmill sites and a remanufacturing plant in Port Alberni, has filed for creditor protection.
San Group, which consists of 15 related businesses as petitioners in court, owes $22 million in unpaid stumpage fees to the B.C. government as well as nearly $14 million in unsecured debt to a long list of creditors.
Co-owner Suki Sanghera said in an affidavit that San Group's financial troubles started in 2023, when lumber prices continued to drop domestically and globally. Inflationary pressures started affecting labour costs, and paired with rapidly rising interest rates the company found it could no longer keep up with financial obligations. The closure of Highway 4 in June 2023 due to a wildfire near Cameron Lake presented another challenge for San Group in moving lumber off Vancouver Island.
A 13-day port strike in British Columbia in early July added to the pressure of not being able to move either finished product or raw logs off Vancouver Island, Sanghera added. On Oct. 17, 2024 San Group announced it would curtail its Port Alberni operations for a minimum of two weeks due to lack of lumber. The mills have not started up again.
Mid Island-Pacific Rim MLA Josie Osborne said hearing news of San Group's court troubles is "especially difficult" to face leading up to the Christmas and holiday season.
"The San Group's decision to seek creditor protection is a massive blow to the Alberni Valley families supported by jobs at the mill and local companies who supply equipment and services," Osborne said in a statement. "Although the full implications of the San Group's financial challenges are not yet clear, supporting the people impacted most is my top priority," she said.
Between 250 and 500 creditors won't be able to pursue payment from San Group until at least Dec. 19. The court-appointed monitor, Deloitte Restructuring Inc. will return to the Supreme Court of British Columbia on Dec. 19 as the case progresses.
Among those creditors are the City of Port Alberni and Port Alberni Port Authority, which entered an agreement in June 2021 with San Group to operate Berth 3 of the port under the name "San Terminals." In court documents filed with the B.C. Supreme Court "San Terminals" is listed as inactive with no current projects undertaken.
As of Aug. 31, 2024, San Group has unsecured trade debt of nearly $14 million.
San Group's properties in the Alberni Valley (including the Alberni-Clayoquot Regional District) have a combined assessed value of just under $22 million, according to an affidavit filed with the B.C. Supreme Court on Nov. 27, 2024 by co-owner Suki Sanghera.
San Group had not paid its property taxes to the City of Port Alberni for 2024 as of Nov. 8, 2024, according to a Freedom of Information (FOI) Request. Mayor Sharie Minions told another news outlet the company pays just under $1 million annually in property taxes.
Minions said in a recent council meeting that San Group's filing for creditor protection will affect the city's 2025 budget, but didn't elaborate. She told other media that the city has brought in the Ministry of Forests' community transition team to assist employees that have been laid off from the Port Alberni mills.
Osborne said new B.C. Forests Minister Ravi Parmar is due to visit the Alberni Valley next week. "Ravi has hit the ground running to tackle the big challenges facing B.C.'s forest industry—from access to economic fibre to faster permitting to U.S. tariffs and softwood lumber export duties and more," she said.
San Group has already attempted to restructure its finances and will look to sell some of its assets to help pay off its debt. Under creditor protection, according to Sanghera in court documents, the company will reduce operations but not shut down entirely.
