Citing a considerable loss of income because of COVID-19, the licensed insolvency trustee for River City Sports is asking creditors to give them more time to make good on a previous agreement for debt repayment.
"River City is simply asking for additional time to pay the balance," trustee Collin LeGall from Lazer Grant LLP told the Free Press on Wednesday, explaining the struggling sports retailer still wants to honour their original $331,000 settlement with creditors under the Bankruptcy and Insolvency Act from 2016.
LeGall said, having already paid at least $240,000 from their prior agreement over the last few years, River City now only owes around $70,000 to lenders, which is why the company filed an amendment to their original bankruptcy protection proposal on Christmas Eve asking creditors to allow them to begin making payments for the remainder of their settlement in instalments from 2022.
According to the paperwork dated Dec. 24, River City cited the following reason for this amendment:
"As a result of the Covid-19 Pandemic, the Debtor’s business income has decreased considerably. The debtor’s only source of income is online sales and customer pick-up sales, as the retail operation has been forced to close. It is unknown when the store will re-open. Without government assistance the business would certainly have closed its doors permanently."
The decision is now up to the creditors, who will hold a meeting on Jan. 13 to decide whether or not to accept River City’s proposal for bankruptcy protection. Anyone owed more than $250 is allowed to vote on the motion.
If accepted, the proposal will allow River City to begin the remainder of their debt payments by paying $5,000 in January of 2022; following which, they will pay up to $30,000 in the rest of 2022 through installments per month. Then, in 2023, River City will finish off the final $40,000 in payments.
"The proven creditors voted in favour of the proposal back in 2016," LeGall wrote in a statement, adding there is a difference between the class of creditors — "proven" or "unsecured" — who are affected by this amendment.
"This amendment to the proposal asks the unsecured creditors for additional time," he said.
The bottom line on the list of creditors affected by the proposal (whose claims amount to $250 or more), is $8,054,429.58 in the debt they are owed from River City, according to financial paperwork sent to court and creditors. A five-page list names each of those 89 creditors, signed by the city and the province.
LeGall disputed those figures Wednesday. He said, "The unsecured creditors, from 2016, that are affected by the proposal totals $3,549,356.52."
The store’s remaining outlet is still open for business.
Temur Durrani reports on the economic impact of the coronavirus pandemic for the Winnipeg Free Press. Funding for this Free Press reporting position comes from the Government of Canada through the Local Journalism Initiative.