by Melissa Ligertwood - Vernon - CASTANET Jul 25, 2013 / 2:00 pm
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map of the KPR short-line railroad.
Image Credit: SOURCE/trainweb.org
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The announcement of Kelowna Pacific Railway’s (KPR) bankruptcy on July 8
has sparked considerable debate about the impact the closure will have
on large companies, such as Tolko and Sun-Rype, who rely on rail
transport.Such companies are looking at increased transportation costs and the added logistical headache of implementing a back-up plan. But what about the people who are owed money? Several local businesses and various North Okanagan municipalities,
aka taxpayers, may be the ones taking the biggest loss as a result of
KPR’s inability to stay profitable. Not to mention KPR employees who are still owed outstanding wages, and possibly vacation pay as well as severance. KPR is bankrupt but it has assets, says bankruptcy trustee John McEown of Boale, Wood and Company. “We are going to continue with the administration of the bankruptcy.
We’ll be realizing on the assets and taking that money to pay the
creditors,” McEown said. According to the official statement of affairs, assets are valued at
just over $2 million with liabilities at $3.2 million, leaving a
shortfall of close to $1.2 million. GATX Rail Locomotive Group out of Chicago is listed as first in line to get paid. That bill alone will eat up $1.3 million. Employees are next in line but are only eligible to claim a maximum of $2,000 each. The rest of the debts, aside from secured loans owing to Knighthawk
Rail, are considered unsecured which means creditors will have no
further recourse once the realized funds are allocated. The Armstrong Regional Cooperative (ARC) is the single largest creditor on that list with an amount owing of $492,271. ARC General Manager Jeff Payne says they have enjoyed a long-term,
productive relationship with KPR, and when the railway started to get
behind on fuel payments, it wasn’t an immediate cause for concern. “They had been 30 to 90 days late in the past, it wasn’t something we
hadn’t seen before. The bills always got paid in the end so we were
trying to work with them on it,” says Payne. He says the loss is going to hurt, but these things happen in business. ARC plans to delay some of their plans for improvements and
expansion as a result. “It will definitely have an impact on us but we’re going to do
everything we can to make sure it impacts us as little as possible.
We’ve been at this for 91 years, it’s not going to kill us,” he said. The largest creditor collectively is the taxpayers of British
Columbia.
KPR owes outstanding property taxes, in some cases more than
two years in arrears, to eight Okanagan municipalities as well as rural
property taxes to the province. Altogether that bill comes to $673,977. Director of Finance for the District of Coldstream, Trevor Seibel,
says the good news is that there’s a provincial process in place that
allows municipalities to collect on unpaid property taxes. “There is a process outlined in the Community Charter that addresses
how municipalities deal with accounts in arrears,” said Seibel. “If
property taxes are not paid, the land can be put up for tax sale.” Seibel says that the current situation is complicated because the
lands are owned by CN Rail. Although KPR is responsible for the property
taxes, the threat of a tax sale changes the game. “We’ve been in contact with CN. We’ve notified them of the
delinquency and we’re waiting to hear how they will proceed,” he said. Nevertheless, the District of Coldstream and most other
municipalities, Seibel says, are quite dedicated to recouping those
funds. “We operate on the basis that we will recover any taxes outstanding on properties,” he said. The first bankruptcy meeting for creditors is scheduled on Thursday in Vernon.
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http://www.boalewood.ca/2013/07/08/kelowna-pacific-railway-ltd/
Updated July 2013
Kelowna Pacific Railway Ltd. made an Assignment in Bankruptcy on July
5, 2013 and Boale, Wood & Company Ltd. was appointed as Trustee.
The Certificate of Appointment and Creditor Package can be found below.
Certificate of Appointment
Creditor Package
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