Metroland Media Group Ltd.
August 22, 2024
The Proposal Trustee is in the process of finalizing claim calculations to determine the amount of each non-union employee and retiree’s distribution payment from the Proposal funds
On July 26, 2024, the Proposal Trustee (Grant Thornton Ltd.) held a meeting with the inspectors to provide an update on future distributions to creditors. Inspectors are creditors who were appointed to oversee the proposal proceeding at the Reconvened Meeting of Creditors on December 11, 2023. Andrew J. Hatnay of our firm is an inspector. At the meeting of inspectors, the Proposal Trustee advised they will be sending approximately 1,500 cheques to all creditors, including former non-union employees and retirees, as a one-time distribution payment.
There are three components to the non-unionized employee distributions:
- As noted in our previous updates, the non-union employees have an omnibus priority claim of approximately $1M in respect of unpaid pension contributions that will be paid at 100 cents/dollar (subject to a small levy paid to the superintendent of bankruptcy).
- The amount of each non-union employee or retiree’s claim in respect of other unsecured amounts (e.g., severance pay, termination pay, vacation pay, unpaid benefit contributions, and/or post-retirement benefits) will be paid at a distribution rate of approximately 17 cents/dollar (note: this amount may change slightly as claims of other creditors are finalized).
- The total estimated distributable amount in respect of the non-union employee unsecured claims is approximately $3.64M. To date, non-unionized employees have received approximately $3.15M from Service Canada in respect of WEPP payments. Of this $3.15M, Service Canada is entitled to subrogation rights in the amount of approximately $2.3M, which reduces the distributable amount to the non-unionized employees to approximately $1.34M. For certainty, $1.34M represents the total funds to be distributed to all former non-union employees over and above the aforementioned pension amounts and the previously collected WEPP amounts.
- Non-unionized retirees have a claim of approximately $1.4M. These creditors will also receive approximately 17 cents/dollar, resulting in a distribution of $238K.
Aggregate Unsecured Distribution payments to former non-union employees and retirees to be reduced from approximately 17% to 16% on account of additional legal and financial advisory fees (not accounting for WEPP subrogation)
On October 13, 2023, our firm was appointed representative counsel to all former non-union Metroland employees. As per the appointment order, the Ontario Superior Court of Justice authorized $100,000 in legal costs (plus disbursements and HST) to be paid to our firm from the proposal funds. On December 7, 2023, the Court expanded our firm’s mandate to include non-union retirees and authorized an additional $100,000 (plus disbursements and HST) to be paid to our firm from the proposal funds.
Since our appointment as representative counsel, we have calculated and revised the claim calculations of all former non-union employees and retirees, identified a pension priority amount owing to the employees in the amount of $1 million which is required to be paid at 100 cents/dollar, prepared for and attended court hearings to approve the Proposal, reviewed former non-union employee claims for a WEPP payment, and prepared materials and argued in court in support of the Proposal Trustee’s motion to limit Service Canada’s WEPP subrogation claim where the government sought to recover funds from the employee distributions as a refund for all WEPP payments. During this process, we obtained confirmation that Service Canada will not require a refund from the $1 million pension claim and that amount is scheduled to be released to the employees without reduction from Service Canada.
As a result of these activities, our firm, and the financial advisor retained by our firm to assist in negotiations on behalf of the employees and retirees (E&Y Parthenon), have incurred additional costs. We will be requesting the court to approve further $238.11 (+ $30.95 for HST) in respect of disbursements, $149,067.04 (+$19,378.72 for HST) for our firm and $27,686.00 (+$3,599.18 for HST) for the financial advisor for a total of $200,000. These fees will be paid as a deduction from the distribution payments to be made to former non-union employees and retirees. As a result of this deduction, distribution payments in respect of the non-union employees and retirees’ unsecured claims (e.g., severance pay, termination pay, vacation pay, benefits – including, post-retirement benefits, and VerticalScope shares) will be reduced from approximately 17 cents/dollar to 16 cents/dollar.
