Group Control Selection | The RPA giant plays its last cards

By entrusting Groupe Sélection’s financial recovery to its lenders, Judge Michel Pinsonnault goes against the “fundamental objectives” of the Companies Creditors Arrangement Act (CCAA), pleads the giant of residences for seniors (RPA), which asks the Court of Appeal of Quebec to reverse the decision of the magistrate.

In its request for leave to appeal, filed Tuesday, the company, which wishes to be in charge of its own restructuring, identifies five elements, where, in its opinion, Judge Pinsonnault erred.

“177 paragraphs long, the trial judgment does not refer to any section of the CCAA or to any case law whatsoever and contains several errors of law, as well as mixed errors of fact and law which are decisive in the context of this case”, one can read.

In this case, Selection and the banking syndicate, to which the company owes 272 million, are fighting over control of the financial recovery that will take place under the CCAA. The creditors claim to have completely lost confidence in the company – in default – as well as in its founder and president Réal Bouclin.

Monday, the magistrate had turned to the proposal of the banking syndicate. The company’s financial disorganization and Mr. Bouclin’s absence from the hearings surrounding the future of the company he founded had weighed in the balance.

According to the lawyers of Selection, the initial order of the day before makes “principles” and “fundamental objectives of the CCAA”, namely to allow an entity which seeks the protection of its creditors to restructure.

“The prescriptions […] greatly exceed what is reasonably necessary to avoid the immediate liquidation of an insolvent company.

By retaining the controller PricewaterhouseCoopers (PwC), the controller suggested by the banking syndicate, Judge Pinsonnault made a decision that we do not see every day. Generally, the choice of controller proposed by the company that turns to the CCAA is ratified by the court, except in exceptional circumstances.

According to Sélection, by allowing PwC to be a “super controller”, the judge entrusts the firm with powers “which are practically the same as those normally granted to an interim receiver” with increased powers.