Selection Group Insolvency | Reduced size and fewer employees

The ax is about to fall at Groupe Sélection’s head office, since its size will be considerably reduced. At the same time, the restructuring manager is trying to recover $700,000 in fees paid to businessman Herbert Black for financing that was never disbursed.

These elements appear in the most recent report of the controller Christian Bourque, of the firm PwC, prepared within the framework of the procedures which take place under the Companies Creditors Arrangement Act (CCAA) since last November.

We learn in particular that in the context of the auctions in force, no proposal has been superior to that of Revera for the portfolio of 25 residences for seniors (RPA) held jointly with Selection. Mr. Bourque suggests that Judge Michel Pinsonnault, of the Superior Court of Quebec, endorse this transaction.

“It is expected that additional permanent job abolitions will take place in July and August,” wrote Mr. Bourque, noting that in the wake of recent transactions and those to come, the size of the real estate developer and RPA will not be more the same.

However, the controller does not specify the extent of the early layoffs. It was not possible to obtain details from the latter on Tuesday. The cuts do not affect staff within the RPAs. Currently, the company headed by Réal Bouclin has 186 employees across its various entities. About fifty layoffs took place last December.

When the transaction with Revera is formalized, the portfolio of 48 Selection RPAs will therefore have shrunk by three-quarters. Another partner, the Blackstone investment fund, had already bought out the shares of the Quebec company – which owns 12 other complexes.

For residents, these changes are unlikely to have any consequences. Cogir – a rival of Sélection – will become the manager around July 31 of the 25 RPAs that will belong to Revera. Discussions are ongoing and The Press found that residents of at least one RPA had already been notified of the arrival of a new manager. It is reasonable to believe that Sélection employees will join the ranks of Cogir.

Unjustified charges

A new dispute is also on the horizon as part of the restructuring at Sélection. It concerns a sum of $700,000 paid in costs to businessman Herbert Black ($500,000) and his attorneys ($200,000) last November, when the fallen RPA giant protected itself from its creditors .

At that time, Mr. Bouclin was trying to convince Judge Pinsonnault to opt for his recovery strategy rather than that of his bankers. The manager of Selection said he convinced Mr. Black to act as a temporary lender. This businessman proposed to put up to 60 million on the table.

The magistrate had finally decided in favor of the plan of the creditors of Selection. In his decision, he deplored that the payments in question were “non-refundable”, adding that Selection “certainly did not have the luxury of losing $700,000 under such rather unusual conditions”. Nevertheless, the controller is trying his luck in the hope of recovering this sum, paid for “interim financing which was not approved by the court and therefore never disbursed”.

“Despite various exchanges, this file has not progressed and the controller, with his attorney, is therefore busy preparing a request which should be filed soon,” writes Mr. Bourque.

During a telephone interview with The Press, Mr. Black said he had nothing to be ashamed of. Everything was done in the rules of the art, he says.

“If someone wants tens of millions in reserve, the bank will charge him a fee too,” said the businessman. Anyone would. I don’t believe anything was done illegally. »

When questioned, Mr. Black replied that he had not been made aware of a potential appeal by PwC.

Bidding is not over at Sélection. The controller has extended, until June 28, the deadline for the process for assets such as its participation in the District des Brasseurs project (formerly Molson brewery) and other projects. For Mr. Bouclin’s company, what happens next depends on its ability to find an ally to buy out its partners and keep a handful of assets.

Sélection has already been excluded from Espace Montmorency, a multi-use complex comprising shops, residential towers and underground parking. The Fonds de solidarité FTQ – one of the shareholders – had bought out 25% of the Quebec company. Its stake in the project hotel will also be sold to existing partners, namely the Fonds FTQ, Montoni and Urgo.