Selection Group | The financial disorganization and the absence of Réal Bouclin weighed heavily

Groupe Sélection’s financial disorganization and the absence of its founding president from the hearings concerning the future of his business led Judge Pinsonnault to entrust the financial recovery process to the controller of the banking syndicate.

The owner-manager of residences for the elderly (RPA) of Sélection announced its intention to appeal and requests a stay of execution of the judgment in a press release published at the end of the day on Monday.

“Selection Group disagrees with many elements of law retained in the conclusions of the judgment which go against an effective financial restructuring in the context of the Companies’ Creditors Arrangement Act”, says Réal Bouclin. , Chairman of Selection Group.

In the present case, Groupe Sélection and the banking syndicate, to which Sélection owes 272 million, disputed control of the financial recovery to come under the cover of the Companies Creditors Arrangement Act (CCAA). Sélection took shelter from its creditors on November 14th.

The banking syndicate maintains that it has completely lost confidence in Groupe Sélection, which is in default of repaying its loan.

The court’s decision to retain PricewaterhouseCoopers (PwC), the monitor of the lenders, is not trivial. When a company applies for CCAA protection, the objective pursued is to financially restore the company so that it can continue its activities and not to liquidate the assets as in a bankruptcy process.

In this context, the choice of monitor proposed by the company seeking CCAA protection is usually ratified by the court, except in exceptional circumstances.

The present case involves 137 entities, the court points out, with interests in assets, including approximately 50 RPA residences, which entities owe nearly 1.5 billion at the time Groupe Sélection (GS) has a recurring cash deficit of 7 million. per month.

“In short, circumstances and the very specific current context constitute precisely a completely exceptional situation allowing an interested creditor such as the Syndicate [bancaire] to formulate the Request, ”said Judge Pinsonnault in his decision rendered Monday afternoon.

Herbert Black and his lawyers have already received $700,000 from Selection

Groupe Sélection’s controller, FTI Consulting, essentially proposed replicating the same business model, including continuing cash-draining land acquisition and construction activities. The idea was to buy time with the interim financing of 50 million put forward by Montreal businessman Herbert Black to maximize the disposal of certain assets to repay creditors.

The scrap metal magnate has already received a non-refundable payment of $500,000 from Selection, plus $200,000 to cover his legal fees. “GS certainly did not have the luxury of losing $700,000 under such rather unusual conditions,” noted the Court.

“The ‘business as usual’ approach likely advocated by Groupe Sélection does not appear to be reasonable, realistic or fair under the circumstances,” Judge Pinsonnault ruled.

The court expressed great concern about the major shortcomings identified with regard to Groupe Sélection’s financial management by Christian Bourque of PwC, to whom the court grants a great deal of credibility.

The judge also considers that despite his professional qualities, the choice of Yanick Blanchard as head of restructuring is not appropriate, he who has never operated or recovered RPA or construction companies.

“Another decisive element in the eyes of the Tribunal is the discovery on the morning of November 15 [que] GS transferred 1.5 million to Gaia [société appartenant aux enfants de Réal Bouclin]. This payment was preceded by another payment of almost 1 million, five days earlier. These transfers occurred at a time when checks worth 6.6 million are in circulation or in payment stoppage, underlined the magistrate.

The very brief table submitted by Groupe Sélection to justify the transfers did not convince the judge. “Unfortunately, he laments, Mr. Bouclin, the directing mind of Groupe GS, did not testify at the hearing to reassure the Court, but especially the Union and others as to his vision and the correctness of the plan. of recovery that he envisages. »

For its part, PwC, as controller of GS, proposes to take quick action to stop the financial drain, while promoting the maintenance of RPA activities. “The CCAA process takes place under the supervision of the Court, which ensures the reasonableness and appropriateness of the possible solutions envisaged”, indicates the court.

Priorities for seniors

In his decision, Michel A. Pinsonnault repeatedly reiterated the importance of ensuring the continuity of services to the 14,000 occupants of Groupe Sélection’s residences and apartment towers.

“The four-day hearing proved to be beneficial and allowed the Court to note the Union’s openness regarding the development and implementation of a recovery process for GS, focusing above all on the ‘core business” of GS, or on the approximately 50 RPAs, employees, suppliers, all to ensure the safety and well-being of these [résidants] who should not be deprived of the services they have paid for and to which they are entitled. »