Metroland Media Group Ltd.
November 13, 2023
We are writing with a status report on the Metroland bankruptcy proposal since our appointment as Representative Counsel to the non-union terminated Metroland employees on October 13, 2023.
As you know, on September 15, 2023, over 600 Metroland union and non-union employees were terminated en masse without being paid any severance pay and other amounts owing to them. There are approximately 562 non-union employees in our mandate as Representative Counsel.
The Proposal was released on October 17, 2023. The Proposal Trustee (Grant Thornton Limited) also set a date for a vote by creditors on the Proposal for Tuesday, November 14, 2023. Both the company and Proposal Trustee are pressing to move the Proposal forward very quickly. As we explained on our past Zoom calls with employees, according to the Proposal Trustee, the Proposal is to pay employees approximately 13 cents on the dollar of their claims and later, if the WEPPA payment from the federal government is held to apply, WEPPA could increase the total payment to around 26 cents on the dollar. We caution that those estimated recovery rates are only estimates and could change materially.
We have identified many issues that we have raised with the company and Proposal Trustee with respect to: the non-union employees’ claims, the WEPPA application timing and process, certain terms of the Proposal, and the proposed payment from the Proposal in respect of employees’ amounts that are owing to them. We are in discussions with the company and its representatives virtually every day on these issues. We have also requested more information from the company lawyers and Proposal Trustee that pertains to the employees’ claims, other creditors’ claims and recoveries from Metroland assets, some of which we have received and others we are still waiting for.
At this point, we cannot yet advise the non-union employees whether or not to vote in favour of the Proposal. We have also discussed the status of the Proposal with the Union lawyers, and we have jointly requested that the creditors meeting for November 14, 2023 be adjourned, especially so that the WEPPA application to court can proceed first, ahead of a vote on the Proposal. WEPPA is discussed further below.
The Proposal Trustee has confirmed that on November 14, 2023, it will call the scheduled meeting to order to seek a resolution to adjourn the First Meeting of Creditors. We will vote to adjourn the meeting. You are not required to attend this meeting, but if you wish to do so, please register here by November 13, 2023 at 12 PM ET.
Please see this link to the Proposal Trustee’s website where they provide notice of the adjournment request:
Please be advised that the Proposal Trustee has been requested by a number of creditors that at the First Meeting of Creditors taking place on November 14, 2023, the Proposal Trustee seek a resolution for an adjournment of the meeting in advance of a vote on the Amended Proposal. Accordingly, at the First Meeting of Creditors, the Proposal Trustee will be seeking a resolution to adjourn the meeting. It is the intention of the Proposal Trustee to call the First Meeting of Creditors to order at the specified time to among other things, review the Amended Proposal and seek any questions from creditors. Notwithstanding the request for an adjournment, creditors are still required to file a proof of claim in advance of the meeting scheduled for November 14, 2023 in order to be eligible to vote at the First Meeting of Creditors or any subsequent reconvened meeting. However, as set out in the Proposal Trustee’s report, failure to file a claim in advance of the First Meeting of Creditors does not preclude creditors from participating in a distribution under the Amended Proposal.
For the non-union employee claims, we are working on the following:
- WEPPA Application: WEPPA does not apply automatically in a Proposal, as it does in a bankruptcy or receivership. For a Proposal, a court must declare that WEPPA applies. We, or the company, are therefore required to bring an application to the court for a declaration that former Metroland employees are eligible to apply for payments under the Wage Earner Protection Program Act (“WEPPA”). It is our position that this application should be brought now, before a creditors’ meeting to vote on the Proposal, so that the employees will have certainty about whether or not they are eligible to apply for WEPPA. If the court declares former employees can apply for WEPPA, that will facilitate a payment of up to $8300 per employee fairly quickly. That payment would be in addition to the amounts payable from the Proposal, if the Proposal passes at a future creditors’ meeting. Currently, the Proposal says the company will apply for a WEPPA declaration only if the Proposal passes which (assuming it is successful) would delay WEPPA payments to employees. Also, if the WEPPA application is made after the Proposal is approved, and the application is denied by the Courts and/or Service Canada, the entitlement to payments under WEPPA may be permanently lost. Accordingly, we disagreed with that approach due to the uncertainty and payment delays for employees. The motion before the court for a declaration that employees can apply for payments under WEPPA is tentatively scheduled for November 28, 2023. As mentioned above, for the court to hear a WEPPA application before the proposal is voted on, it was necessary to adjourn the creditors’ meeting.
- Calculation of Employee Severance Claims: The Proposal Trustee calculated the non-union employees’ claim in its Proposal documents to be a total of $14M and they argued that employees’ severance claim should only be based on the Ontario Employment Standards Act.(“ESA”) We disagreed and it is our position that the employees are also entitled to a common law severance claim, which for the majority of employees, generates a higher severance claim. We have also received many Metroland employment agreements sent to us by employees that in our view are not confined to ESA only. We recalculated the severance claim of the employees, on a preliminary basis, and found the total claim of the non-union employees, based on Common Law, to be in the range of $22M to$25M. We will be submitting a preliminary Proof of Claim to the Proposal Trustee in the amount of $25M and will refine the claim over the next few weeks. We will also send each employee a breakdown of their claim for any data or other corrections that we will pass on to the Proposal Trustee, prior to any distribution from the Proposal if it passes a vote at a future meeting.
- Pension Contribution Priority: We identified that the amount of the company’s pension contributions owing during the severance period (approximately $170,000) is a priority under section 60(1.5) the Bankruptcy and Insolvency Act and is to be paid in full before any other creditors’ claim. We believe the Proposal Trustee has accepted our position and will designate this amount as a priority payment.
- Additional Information Requested: As noted above, we are examining other aspects of the Metroland situation, and we have asked for more information from the Proposal Trustee which we received this past Friday. We will report further on these aspects shortly.