While emotions are mixed, BC Tree Fruit co-op members in the Okanagan now have a clear path forward after the court ordered that the 88-year old organization must sell its resources after having applied for creditor protection.
After nearly nine decades, the BC Tree Fruits Cooperative – which provided the packing, processing, sale and storage of fruit for more than 300 member farms in the Okanagan – announced that it would no longer be accepting any produce and applied for creditor protection on July 26.
The application was prompted by "extremely low estimated fruit volumes, weather effects and difficult market and financial conditions," said the co-op. The BC Tree Fruit Board of Directors and subsidiaries applied for creditor protection with plans to liquidate the cooperative "in an effort to maximize recovery for stakeholders."
On August 6, a repayment notice was issued by Canadian Imperial Bank of Commerce for more than $50 million in debt.
In Canada, the Companies' Creditors Arrangement Act (CCAA) states that corporations owing debts of more than $5 million can apply for creditor protection in the courts. If granted, the organization will be given a grace period, typically of 30 days, to restructure without having to repay loans to creditors. CCAA is intended to prevent the consequences of bankruptcy from impacting the economy and society.
The application made by BC Tree Fruits was granted and the court proceedings and debt collection pressure was paused. During the stay of proceedings, members of the co-op were left to worry as their fruit continued to ripen on trees while the BC Tree Fruit storage spaces they relied on remained shut.
Without a place to store fruit, farmers will either be forced to sell their produce immediately, potentially flooding the market with apples and dropping prices, enter into hasty storage deals with private facilities, if they can find one with space, or will let otherwise high-quality fruit rot, said Amarjit Lalli, a former board member with BC Tree Fruits and current member of the BC Fruit Growers Association, in an interview with Black Press Media on his apple farm in Kelowna.
"A large portion of the growers membership want BC Tree Fruits to re-open," said Lalli. Most importantly, he said the co-op members want access to the Tree Fruit assets – specifically the specialized controlled atmosphere and cold storage facilities. However, while the co-op members want to use the storage facilities to store their fruit, so too do private packers.
"At the end of the day, the vultures are out there," said Lalli.
"I hate to use that word but that's basically what it is. Everybody is circling trying to pick up the pieces of BC Tree Fruits."
Court documents state that the co-op had more than $111 million in assets as of last year, including several properties, machinery and storage facilities.
In Vancouver Court, on August 26, as many farmers expected, BC Tree Fruit co-op was ordered to sell its assets in order to repay its debts to CIBC.
Lalli said that he is "very disappointed that the government did not take a position at the hearing, considering they had someone sitting at the board table watching this unfold."
Pam Alexis, Minister of Agriculture and Food said the BC Tree Fruits Co-operative is a "private business, and its board of directors made the decision to apply for creditor protection. This process is overseen by the courts and is meant to uphold the interests of the growers who are the owners of the co-op."
"We are monitoring the process very closely for opportunities to ensure key assets are protected, and are in regular communication with the appointed Monitor to see if the services the co-op provided on their sites might still be able to be accessed during the bankruptcy process," said Alexis.
The Ministry of Agriculture is currently working to give growers access to "as many of the services that the co-op provided as possible to ensure they get their fruit to market."
Alexis said the Ministry has set up an 'emergency table' with growers, BC Tree Fruit directors and other members of the agricultural industry to find solutions.
To date, the ministry has connected 120 co-op members with private packers and 73,000 bins of apples have been shipped to packing houses. Each bin holds between 800 and 1,000 lbs of fruit.
The government is also providing financial support for growers to access food safety certification, which was previously provided by the co-op.
"Our government will continue to collaborate with and support B.C.’s tree fruit sector through these challenges.”
