The largest privately owned logging company in B.C. has filed for creditor protection, saying it no longer has the cash flow to maintain operations and pay off its debts.
Teal-Jones Group, which is headquartered in Surrey but has operations throughout the province and the United States, filed its request in B.C. Supreme Court on April 24.
The company has been in business since 1946 and said it’s been largely profitable over the decades. However, Teal Jones said in its filing, a combination of falling lumber prices and rising inflationary pressures since the beginning of 2023 have landed it in a place where it can no longer meet obligations to creditors on time.
According to the court filing, Teal Jones owes more than $300 million to creditors, contributing to its total of $353.8 million in liabilities. The company holds more than double that – $732.1 million – in assets, but none of it is liquid. The vast majority of that money – $500.8 million – is held up in property, facilities and equipment.
Teal Jones said in its filing that it’s been making efforts over the past few months to liquidate some of its assets, including selling numerous properties in Haida Gwaii, but that it hasn’t freed up enough cash. As a result, it’s been reducing operations since March.
Beyond regular payments owed to its creditors, Teal Jones said it needs between $500,000 and $1 million a week to cover payroll. The company employs more than 1,000 people directly and indirectly across its operations, with 400 of those workers based in Surrey. It said it needs “immediate financing to ensure continued operations and (to) meet payroll and other obligations.”
The exact amount Teal Jones said it needs is redacted in its public filing.
On Thursday (April 25), Justice Gordon Weatherill ruled that the application can move forward under the Companies’ Creditors Arrangement Act (CCAA).
Teal Jones is now under a 10-day “stay period,” during which they are protected from outside legal action while they come up with a “plan of arrangement.” The plan will lay out how Teal Jones plans to restructure to deal with its debt. It must then be approved by creditors and the B.C. Supreme Court.
If either party fails rejects the plan, the stay period will be lifted and Teal Jones will likely enter receivership or bankruptcy.
As part of its application, Teal Jones has chosen international business advisory company PricewaterhouseCoopers Inc (PWC) to act as a monitor over the process. It will be PWC’s responsibility to report to the court on Teal Jones’ operations and help with developing a plan of arrangement.
Asked Monday (April 29) if he thought the court filing indicated broader trouble in B.C.’s forestry sector, Minister of Forests Bruce Ralston told Black Press Media he felt Teal Jones’ troubles are rooted primarily in their U.S. operations. Ralston added that some companies that made a lot when lumber prices soared in 2021 may be hurting now if they didn’t put part of that money aside.
He said he spoke with one of the owners of Teal Jones last week, but that they haven’t asked the government for support.
“I’m told that they seem in a position to continue and I certainly hope that they do.”
Teal Jones is set to return to court on Friday (May 3) to request an extension of the stay period, which is currently set to expire on May 6.
Black Press Media reached out to Teal Jones with an interview request, but did not hear back as of publication.
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