Medican appears close to emerging from court protection as a restructured company.
On Thursday, a Court of Queen’s Bench judge in Calgary extended until Sept. 30 the Companies’ Creditors Arrangement Act order shielding the Medicine Hat-based development and construction company from its creditors. By that time, Medican is expected to have been replaced by an employee-owned successor company and have resolved outstanding claims by creditors, said chief restructuring officer Tyrone Schneider in a news release.
“That’s the only option that makes any kind of sense,” said Schneider. “Any company is only as good as its employees. This will give everyone here a stake in the future and make Medican viable.”
Medican came under CCAA protection on May 26, 2010. At that time, it owed more than $120 million to financial institutions and other financiers, in excess of $25 million to trades and vendors, and had $35 million in unsecured loans.
Court was told on Thursday that $87 million has since been paid to secured creditors through the sale and liquidation of assets. These have included several development properties at Sylvan Lake.
“In this case, we saw that the assets either owned or controlled by Medican were valuable enough to make restructuring worthwhile,” said Schneider, adding that the company is now close to being viable.
“We’ve got positive cash flow now. We’ve paid off our DIP (debtor in possession) loan and we’re in the process of finalizing payments to creditors.”
Medican remains involved in two projects at Red Deer: the 148-unit Sierra Michener Hill condominium complex and a 38-unit duplex development, both at Michener Hill. They are restricted to buyers 40 and older, with Sierra Michener Hill connected to Extendicare Canada’s assisted living facility.
The first 52-unit phase of Sierra Michener Hill is nearly sold out, with sales in the second 40-unit phase well underway. Units in the duplex project, which is also condominiumized, are also being marketed.
Founded by Wes Reinheller in 1974, Medican operated as a developer and contract builder and constructed thousands of homes in Western Canada.