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A number of companies underneath the Sunterra banner, identified in Alberta for its agriculture and high-end grocery operations, have taken steps towards creditor safety as three of its U.S. subsidiaries face authorized and monetary scrutiny.
Late final month, Sunterra High quality Meals Markets, Sunterra Meals Company, Sunterra Farms, Trochu Meat Processors and Sunwold Farms all filed notices underneath the Chapter and Insolvency Act, a course of that provides financially strained corporations 30 days of safety from collectors whereas they give you a plan to restructure.
Trochu is the place Sunterra processes its pork in Alberta. The ability was broken in a hearth final summer time and has not yet reopened.
Sunwold Farms is a pig operation in South Dakota the place Sunterra sends pigs to be completed.
“Please be suggested that the corporate isn’t bankrupt and has availed itself to a process whereby an bancrupt particular person, with creditor and Court docket approval, restructures its monetary affairs,” stated the insolvency trustee, Harris and Companions Inc., in letters to collectors for every of the 5 entities.
Paperwork present every of the 5 entities owe hundreds of thousands of {dollars} to collectors, although a few of that features cash owed to 1 one other. For instance, Sunterra Farms Ltd. owes simply over $3 million to Sunterra Meals Corp., and Sunterra Meals Corp. owes $4.9 million to Sunterra Farms Ltd.
In the meantime, a Midwestern farm credit score cooperative has alleged breach of contract and fraud towards three of Sunterra’s U.S. subsidiaries. Since 2002, Sunterra has been delivery pigs to northwest Iowa and South Dakota to complete rising, in accordance with the corporate’s website.
The claims towards Sunterra Farms Iowa, Sunwold Farms and Lariagara Farms South (one other pig-finishing operation in South Dakota) are associated to an alleged “cheque kiting” scheme in South Dakota, court documents show.
All three entities have the identical guardian firm, Sunterra Enterprises Inc.
Cheque kiting refers back to the strategy of depositing cheques from one account with inadequate funds into one other, to briefly make a financial institution stability appear inflated.
In line with Compeer Monetary, the businesses have been sending a number of cheques daily through next-day mail to be deposited with Canada Western Financial institution. On the identical time, they have been additionally sending Compeer a number of cheques, drawn towards the Canada Western Checking account.
“In different phrases, Defendants have been sending almost an identical quantities and numbers of checks forwards and backwards between CWB and Compeer each day,” stated the court docket paperwork.
Compeer alleges the cheques purposely did not exceed $1 million to keep away from scrutiny.
It is alleged that the businesses collectively owe $35,259,796 to Compeer and have $19,017,724 in collateral.
Given the obvious monetary pressure, Compeer has prompt that the businesses cannot afford to correctly feed and look after 110,000 pigs which are getting used as collateral on its loans.
“[An assessment officer for Compeer] testified that Defendants’ pigs lack feed and veterinary care,” the court docket paperwork say. “[He] added that propane was working low, which is used to warmth the barns that home Defendants’ pigs.”
The businesses, for his or her half, stated Compeer was dealing with a self-inflicted downside as a result of it managed the “purse strings” and was making an attempt to “flip off the faucets” to trigger an emergency, the court docket data present.
“Asking for Compeer to “preserve the faucets flowing” whereas Defendants’ accounts are overdrawn tens of hundreds of thousands of {dollars} because of Defendants’ alleged fraud is an untenable argument,” a South Dakota decide wrote in his discussion of the case.
On March 28, the decide granted Compeer’s movement to keep away from mediation within the case and to nominate a receiver.
Sunterra has not responded to an interview request from CBC Information.
A spokesperson for Compeer declined to remark.
The Sunterra firm began with a small household pig farm operated by Stan and Flo Value in Acme, Alta. In 1970 the corporate started a pig-breeding enterprise, Pig Enchancment Canada (now often called Sunterra Farms). In 1990, it launched pork processing in Trochu and Sunterra Market retail areas in Calgary.
In 1990, the corporate informed the Calgary Herald it had invested in a specialty slaughterhouse in Trochu and retail shops in Calgary to promote “superior, ‘uniform-quality’ meat” from “genetically improved herds” to the general public.
Sunterra has eight retail areas in Calgary, Edmonton and Crimson Deer, in accordance with its website.
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