Breakup of Selection Group | Residents could lose cable and telephone

Breaks in services would await private residences for seniors (RPA) of Groupe Sélection because subsidiaries linked to the family of the founder do not pay their suppliers, which arouses “deep concern” for the controller responsible for the restructuring. The insolvent company replies that this is false.

The latest report from PwC’s Christian Bourque paints a worrying picture as the real estate developer and RPA manager has been under the protection of the Companies Creditors Arrangement Act (CCAA). In addition to potential disruptions at some seniors’ complexes, Sélection is losing millions every month and founder Réal Bouclin’s efforts to try to recover company assets appear to be progressing at a snail’s pace.

“The controller was notified that several suppliers, including Videotron and Bell, would have either filed recovery procedures or threatened to cease services if their respective accounts are not regularized”, writes Mr. Bourque, in his report of about thirty of pages.

He will present his observations this Friday to Judge Michel Pinsonneault, of the Superior Court of Quebec. Since the beginning of the proceedings, the magistrate, who is overseeing the case, has repeated many times that the residents of the RPA should not bear the brunt of the debacle of Selection.

The outstanding amounts are estimated at “several million” dollars by the controller. It is impossible to quantify the exact amount since Mr. Bourque says he is unable to obtain the requested financial information, which he deplores.

We are not talking about a potential disruption in the food supply or the supply of basic products, but about telecommunications services (cable and internet) as well as computer support.

In a statement emailed to The Press, Thursday, Selection disputes the assumption of the representative of the creditors. The company says it has “obtained the assurance that there will be no cuts in service to residents”. When it came time to protect itself from its creditors, Sélection managed a network of 48 RPAs. Now, 11 complexes are owned by Blackstone and another 25 are expected to be taken over by Revera.

Two culprits

It is Évolia and Bläckfisk, two entities related to Sélection, which do not pay their bills. The first is run by the children of Mr. Bouclin, according to the business register, and the businessman’s daughter is part of the management of the second.

Essentially, these two companies are used to pay subcontractors and suppliers who do marketing and IT work, in particular. Unlike Selection, they did not protect themselves from their creditors. Évolia and Bläckfisk may therefore be subject to recovery measures. Mr. Bourque said he requested access to Évolia’s finances in order to take stock, but “for the moment”, his request “has remained unanswered”.

According to the report, Sélection attributed this lack of liquidity to “uncollected income” in connection with the Espace Montmorency and District Union projects, adding that the “situation” was “under control”. Mr. Bourque specifies that he has not received any financial information “to date” allowing him to believe that this is indeed the case.

“For several months, the controller has been aware of the significant delay in receivables to pay certain suppliers, specifies Selection, in its statement. All services paid for by the residences have been rendered and will continue to be rendered. »

In the red

As an auction of Selection’s assets prepares, the company is still losing money. Its monthly operating loss is estimated at 9 million despite the controller’s cost reduction efforts. This provides for other layoffs and asks Selection’s lenders to release an additional $20 million in interim financing.

Mr. Bouclin and his financial advisors are still trying to find a way to recapitalize the company. The businessman would like to ensure the continuation of general construction activities and continue to manage nine RPAs in which Sélection holds a majority stake. Seven sites deemed “strategic” – including that of the former Molson brewery in downtown Montreal – are part of Mr. Bouclin’s recovery plan.

There is only one way to get there, and that is with the arrival of a “solid financial partner”. The problem: it may be difficult to find.

“Several financial partners, lenders and other stakeholders involved with Sélection have made it clear that they are no longer ready to support Sélection’s activities,” recalls Mr. Bourque.

According to him, Mr. Bouclin and his advisers have a lot on their plate. So far, the documents presented are “high level” and are not supported by a complete financial model to “quantify the needs for funds”. The details obtained from the businessman concerning the identity of the possible financial partners sought, the degree of progress of the discussions and a timetable for the filing of a letter of intent are only “generic”, writes the controller.