The League group of companies’ attempt to improve its financial situation under the Companies Creditors Arrangement Act has cost more than 40 employees their jobs.
League CEO Adam Gant confirmed there are more than 40 staff across the country whose last day will be Friday.
“We did give notice to a fair chunk of staff ... it’s a significant portion of the League team,” he said.
League has just over 100 staff within its group that comprises more than 100 companies.
The bulk of the layoffs will be at League’s Victoria head office, where administrative staff is based.
The layoffs are likely to be permanent, even if League manages to remain a going concern after going through the court-approved restructuring process, as the company that emerges will look very different.
“We are doing a very significant course correction to manage costs and protect as much value as possible,” said Gant. “[The new League] will need very different kinds of staff and have a very specific real estate focus.”
Under creditor protection, League has an initial 30-day period, which expires Nov. 18, to work on restructuring and developing a plan for creditors and investors. Protection can be extended indefinitely by the courts.
The restructuring so far has involved the court-approved monitor, PricewaterhouseCoopers, going through the corporate structure with League management to determine which assets to hold, refinance or liquidate.
Last week, the court approved the sale of the Westlock Plaza Shopping Centre in Westlock, Alta., to Haasbro Holdings for $2.29 million.
Gant said they are currently looking at selling two other properties.
“We are going through current valuations and future valuations ... the plan is [before the Nov. 18 hearing] to have a clearer picture of what can be done with each property and what should be done overall. What we are focused on is what combination of outcomes on a per-asset basis gives the best value for everybody,” he said.
Okanagan-based League investor Richard Quiring said while he is concerned, he backs the restructuring process.
“My hope and what I’m holding onto is the company can be restructured and that things can be brought back on track and value can be created again ... Right now, I would think the value is a fraction of what a person would initially have invested,” he said.
Quiring said the CCAA process came as a shock and a huge disappointment to his family, which has been invested with League across a number of projects since the beginning.
Another League investor, Victoria-based Ash Knightley, is more pessimistic.
Knightley, who invested an undisclosed sum in the $10-million Quadra Villa rental project, doesn’t think he’s going to see his money again and has little faith in the CCAA process to work for League’s thousands of investors.
Knightley believes money sunk into projects like the 64-unit Quadra Villa was sucked into League’s $1-billion Capital City Centre project in Colwood. That came to a halt in July when construction financing dried up.
“The cash-flow demands were huge and they didn’t have proper construction financing to complete the project,” said Knightley, who believes League started looking around its assets for cash to fuel it. “Because of Colwood, because their focus has been on keeping it alive, it has sucked the life out of everything else.”
Knightley is trying to mount a campaign among investors in the Quadra Villa project to unseat League as the general partner in the project and get their investment out of a project he thinks is a decent investment.
League and the monitor appear to agree that the Quadra Villa project is worth pursuing. This week, the court approved financing to complete the renovation that was 95 per cent finished before creditor protection. The new financing will pay contractors who had been owed $745,000 and fund the $490,000 required to finish the job.
Gant said they have not yet considered if Quadra Villa would be sold.
League has 3,000 investors who have invested more than $350 million in its various entities. The League group claims assets of $395 million, mortgages owed of $185 million and implied equity of about $210 million.
League also has 333 trade creditors owed more than $15 million.
