Selection Group Insolvency | Company’s appeal attempt rejected; bankers in charge

Groupe Sélection lenders now have free rein to turn around the retirement home giant (RPA). The Quebec Court of Appeal dismissed the company’s claim, which opposed the lower court’s decision on the grounds that it would lead to liquidation rather than restructuring.

In his 11-page decision handed down on Monday, Judge Peter Kalichman explained that he was not convinced that an appeal of the Superior Court judgment – ​​the scenario desired by the company – “will not unduly hinder the progress of the case”. Groupe Sélection’s coffers are almost empty, and the company, which is insolvent, was losing 7 million per month.

This situation “weakens” the ability of the company to maintain services to its approximately 15,000 residents – the vast majority of whom are seniors –, underlines the magistrate in his judgment.

At the end of the afternoon, Monday, Groupe Sélection had not yet commented on the decision of the Court of Appeal.

The owner and manager of RPA is under the protection of the Companies Creditors Arrangement Act (CCAA) since November 14. The company and the banking syndicate, to which it owes 272 million, disputed the control of the restructuring to be carried out. Judge Michel Pinsonnault, of the Superior Court, the court of first instance, ruled in favor of the banking syndicate, led by the National Bank.

This decision by the Court of Appeal means that PwC, the monitor of the lenders, can get down to business. It is this firm that will make the decisions to straighten out Groupe Sélection’s finances. Sales of assets and stakes in real estate projects are to be expected during the process. Since the company will be entitled to interim financing of 20 million, it is promised that the quality of services in RPA will not be affected.

Refuted Arguments

According to Groupe Sélection, the trial court’s decision conferred too much power on PwC and the bankers’ plan constituted nothing more or less than a disguised liquidation. The Court of Appeal concedes that PwC’s powers are “considerable”, but adds that the restructuring will be carried out under the supervision of the courts. She recalls that Judge Pinsonnault had already indicated that a liquidation was not “desirable, nor even conceivable”.

Judge Kalichman also believes that the trial court’s decision was “set out in an extremely detailed judgment”. The latter recalls that serious shortcomings regarding financial management at Groupe Sélection had been revealed when the company was placed under the CCAA.

” The judge [Pinsonnault] has very serious concerns about the capacity of the management team of the debtors (Selection) to ensure the financial management of these, can be read in the decision. Not only was she unable to present reliable financial projections, but she showed a worrying lack of transparency, including during the hearing, which aggravated the judge’s concerns. »

In its judgment, the Court of Appeal pointed out that, in addition to the banking syndicate, Groupe Sélection’s partners (Montoni Group, Fonds de solidarité FTQ and Revera) opposed the restructuring plan proposed by Groupe Sélection as well as its interim financing, which included “much less attractive” conditions.