The Superior Court authorizes the transaction between Duroking and Groupe Galarneau

Spread the love

Superior Court Approves Settlement Between Duroking and Groupe Galarneau

Trustee's Report Says Duroking's Offer Is “Best” obtainable in the circumstances” and that the continuation of Michel Galarneau's employment causes “no prejudice to unsecured creditors”.

The Galarneau company facilities on University Boulevard, Rouyn-Noranda.

The Superior Court “grants” the motion submitted in Montreal by the lawyers of the five companies that make up Groupe Galarneau. This is revealed by a decision by Judge David R. Collier, rendered on December 29, a copy of which was obtained by Radio-Canada.

Duroking should in particular pay off the approximately $18 million in guaranteed debt of Groupe Galarneau. The unsecured ones, which total more than $22 million, will remain unpaid. The latter are due to various suppliers and subcontractors.

Judge Collier's decision spans some forty pages, including appendices.

A report produced by trustee Pierre Marchand on the transaction, a copy of which was obtained by Radio-Canada, reiterates that it is the best that can be obtained under the circumstances.< /p>

Also read:

Mr. Marchand, who works for the firm MNP, in Montreal, believes in this case that the continuation of the employment of Michel Galarneau, the current president of the company, does not pose any prejudice to unsecured creditors.

Under the signed agreement, Mr. Galarneau will obtain 25% of the company's shares once it is reorganized.

Pierre Marchand adds that this provision is to the advantage of secured creditors who support the contemplated transaction. He deems this reasonable due to the minority nature of the position that will go to Michel Galarneau. Especially since it is a condition of both the buyer and his financier.

The syndic's report, of nearly thirty pages , recommended that the Court grant the motion submitted to it earlier this month by the lawyers of Groupe Galarneau. It was submitted on December 21.

The syndic's report addresses the financial difficulties of Galarneau Entrepreneur Général (GEG), one of the five companies affiliated with the Galarneau Group, founded in 1987.

The company, historically profitable, held equity of more than $5 million as of March 31, 2021.

It has, however, suffered pre-tax losses of more than $19 million during the fiscal years of the 2022 due to five loss-making projects that generated a negative gross margin of nearly $9 million.

“The losses on these projects were mainly generated by the execution of a major project, greatly exceeding the typical size of projects historically carried out by GEG. The rapid increase in business volume from $40 million in [fiscal year 2019] to nearly $80 million in [fiscal year 2022] has created complex production management challenges. These challenges, combined with the effects of the COVID-19 pandemic on supply difficulties and human resources management, have led to a lack of profitability on several projects at the same time. »

— Excerpt from the report of Pierre Marchand, Licensed Trustee in Recovery and Insolvency

These losses rendered GEG insolvent, its equity falling from $5 million to a negative amount $13 million.

The results of the other companies in the group are insufficient to support these operating losses, which had the effect of rendering [them], as co-borrowers, insolvent, continues the trustee's report.

The offer made by Duroking to Groupe Galarneau is the highest to have been received during the sale process.

Other documents obtained by Radio-Canada from the Office of the Superintendent of Bankruptcy detail the list of Groupe Galarneau's creditors over nearly twenty pages.

Several of these companies have offices in Abitibi-Témiscamingue, in Rouyn -Noranda, Val-d'Or and Amos, in particular.

Groupe Galarneau has some 300 employees in the region. The transaction should preserve their jobs.

Galarneau Group declined our interview request through its lawyers. The Duroking Company and its attorney had not responded to our interview request at the time of this writing.

Previous Article
Next Article