ABC District office to be sold, stay of proceedings extended

EDMONTON – At the most recent hearing on June 26, 2015 the Court granted a stay of proceedings which extended protection to the Alberta-British Columbia (ABC) District under the Companies’ Creditors Arrangement Act. One result of the court order is that the District will be protected from legal action until at least August 31, 2015 when the matter returns to Court.

Since then, the ABC District has further announced that their office building is being sold. Concordia Lutheran Seminary (CLS – Edmonton) has offered the use of vacant space in their building to ABC District staff, and they will begin working in the new building August 1. “Although we are separate corporate entities, we share a commitment to serve the ministry needs of Lutheran Church–Canada and the ABC District,” explained CLS President James Gimbel.

“Despite the challenges of these changing times, we are looking forward to this move,” said ABC District President Elect Glenn Schaeffer. “We anticipate the opportunities we will have to work and worship alongside the seminary community.”

The District advises that their office telephone and contact information will remain the same, but beginning August 1 they will have a new mailing address:

ABC District Office
7040 Ada Blvd NW,
Edmonton, AB T5B 4E3

Stay extended

The purpose of the stay of proceedings is to allow the District Group to create a Plan of Arrangement to maximize returns to creditors while allowing the organizations to continue operations. That work continues under the guidance of the Chief Restructuring Officer (CRO), under the supervision of the Court-appointed Monitor Deloitte Restructuring Inc. In a letter to creditors released July 8, the Monitor notes that “drafts of the Plans have been prepared by the Applicants and are currently being circulated amongst the Monitor, the Monitor’s legal counsel, the Applicants, the CRO and the Applicant’s legal counsel.” Following this, the plans will be brought to the two creditors’ committees for review and comment.

The Monitor further notes that it anticipates that the Plans will be filed “prior to the expiry of the Stay,” which is currently scheduled for August 31, 2015.

At the most recent court hearing, the Court also authorized the distribution of mission remittances to Lutheran Church–Canada (LCC). Thirty-five percent of mission remittances from LCC congregations in Alberta and British Columbia to the ABC District are normally transferred on to LCC. However, this regular transfer of funds has been frozen since the ABC District entered CCAA protection. Funds frozen included 35% of the total mission remittances received by the District in the pre-filing period up to January 23, as well as from congregational remittances received by the District since entering CCAA protection.

Other action taken by the court includes the approval of the sale of a Richmond, British Columbia condominium, securing remuneration of legal counsel for the Church Extension Fund Committee and the District Investments Ltd committee as part of administration charges granted in the initial order, and further confirming that legal costs incurred by District and DIL in dealing with the Securities Commissions of Alberta and British Columbia also be included under administration charges.

The Kellen Claim

In advance of the consideration of an extension, on June 18 the Court heard the application of Randy Kellen, who had requested the stay of proceedings be lifted in order to pursue claims against the officers and directors of the District Group. The Court-appointed Monitor opposed the move, asking the Courts to adjourn Mr. Kellen’s request until after the District Group’s Plan of Arrangement could be presented and voted upon by creditors. Deloitte noted in their briefing to the Court that “the Debtors have been acting in good faith and with due diligence in pursuing the Plans and there is no evidence that the Plans are likely to fail.” Deloitte further suggested that “Mr. Kellen will not suffer any hardship or significant prejudice by a refusal to lift the stay of proceedings,” and that “the restructuring efforts of the Debtors will be prejudiced if attention, time, and resources are diverted from the restructuring process and redirected towards defending a complex claim.” The Kellen application was eventually adjourned by consent of all parties.

The Court also granted an Order for the Preservation of Records at the same time, directing “all former directors, officers, employees, agents, accountants, legal counsel and shareholders and all other persons acting on their instructions” to inform the Court-appointed monitor of the location of their District-related records. It also ordered the prevention of the destruction of these records, while clarifying that there has been no “admission or judicial determination” that any such destruction occurred prior to the order being granted.

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