A court-appointed monitor is overseeing the San Group of companies after the Langley-based firm — which runs two sawmills and a remanufacturing plant in Port Alberni — filed for creditor protection.
The San Group said creditors are claiming they are owed more than $100 million.
The company, which buys its logs on the open market, has imposed layoffs and curtailments at its sawmills and value-added plant in Port Alberni in recent weeks because of a shortage of logs.
“Our immediate concern is certainly with the employees and any local businesses who are owed money,” said Port Alberni Mayor Sherie Minions, who estimates 100 to 200 employees have been laid off in the community.
Minions said the city has “activated” the Forests Ministry’s community transition team “to bring some direct support to those workers.”
Forests Minister Ravi Parmar said he couldn’t comment on the creditor protection, as it’s a matter for the courts, but the ministry is in touch with the San Group and “supporting them where possible.”
Minions said San Group has done its best to bring in fibre to be able to operate consistently, but it’s been challenging.
The San Group contributes just under $1 million a year in property taxes, said Minions, who would not comment on its current tax status.
Deloitte Restructuring Inc. was appointed monitor in B.C. Supreme Court in 91原创 on Nov. 29. The matter returns to court on Monday to plan the next steps.
The company’s goal is to seek approval for a court-supervised sale and investment-solicitation process that the monitor would run in consultation with RBC and Business Development Bank of Canada, the main secured creditors.
The San Group has been one of the pillars of the Port Alberni economy since it built a major value-added manufacturing plant supplied by local large-log and small-log sawmills several years ago.
By 2021, it had invested more than $100 million in the region and also signed a lease for a deep-sea berth with the Port Alberni Port Authority.
In January, the province announced the company would receive up to $2.5 million from the Manufacturing Jobs Fund for new equipment.
But the San Group has missed loan payments and was facing rising pressure for payments owed for tax deductions and GST, it said in a petition to the court.
The monitor was appointed after the San Group asked the Supreme Court for protection under the Companies’ Creditors Arrangement Act.
The monitor is overseeing the firm while it operates, to keep an eye expenses and spending and to report back to the court.
The federal legislation is intended to give firms in financial difficulty protection from their creditors for a period while they restructure their affairs.
In its petition to the court, the 45-year-old San Group described itself as running a multi-faceted forest products enterprise.
Last month, the San Group’s U.S. customs import bonds — which allowed it to export products to the U.S., its primary export market — expired. It then paid $200,000 to allow it to export to the U.S. for three months, the petition to the court said.
Challenges faced by the San Group since 2023 include erosion of lumber prices, inflation, higher interest rates and ongoing fibre supply problems.
The closure of parts of Highway 4 in the summer of 2023 because of wildfires “crippled” business, followed by a port strike that prevented cargo going to 30 terminals and hurt its cash flow. In April of this year, a major fire broke out at San’s Acorn Mill in Delta. An insurance claim is pending.
The province has said it is owed $22 million in stumpage fees and liens were placed on some properties this year.
The San Group disputes the amount owed, the petition said. The company is working with the province to determine how much is owed and to negotiate a payment plan, the petition said.
Initially, on Oct. 27, RBC issued a demand for more than $100 million. And on Nov. 7, the Business Development Bank of Canada issued demand letters for more than $43 million, the petition said.
San Industries Ltd. was founded by Kamaljit Singh Sanghera, Sukhjit Singh Sanghera and Iqbal Deol.
Collectively, the company’s land holdings were assessed at $48.3 million in October 2023, while the book value of assets such as wood-processing machines and systems, trucks, excavators and construction equipment came to $89.8 million, the petition said.
During the winter of 2023-2024, the company sought to restructure with potential backers but was unsuccessful.
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