The Ventures West and Tłı̨chǫ Landtran transport companies have filed for creditor protection after years of heavy losses and the failure to renew a major contract.
An affidavit filed by Mark Brajer – chief executive of the Tłı̨chǫ Investment Corporation, parent company of Tłı̨chǫ Landtran – states 40 employees are directly affected and only a "small number" will be retained to assist in winding down operations.
Two other Alberta numbered companies fall under the same filing, which allows the companies to work on a rescue plan while protected by the courts – meaning creditors cannot, for the time being, make things harder by trying to collect on debts.
The application for creditor protection was filed in Alberta as the companies' operations are based in Sherwood Park, near Edmonton.
An initial order granting protection was given by the Court of Queen's Bench of Alberta on November 29. The order runs out on December 8, but the companies are already seeking a second order to prolong that protection.
The four companies together posted losses of more than $18 million in 2018-19 alone, court documents show. Brajer, in his affidavit, says the group holds $40 million in assets but faces $60 million in liabilities.
Almost two-thirds of that $60 million is $37.6 million advanced to the transport companies, over the years, by the Tłı̨chǫ Investment Corporation. A further $15.6 million takes the form of a CIBC loan.
"The transport companies have experienced years of significant financial difficulties and cannot continue to operate without extensive financial support," Brajer wrote in his affidavit, which formed part of the companies' initial request for protection.
Without creditor protection, Brajer added, "the transport companies will continue to incur losses that might ultimately jeopardize the continued operations of the other Tłı̨chǫ companies and the continued employment of their approximately 410 other employees.
"Any interruption of such operations would have significant negative consequences for the northern people, businesses, and communities served by the Tłı̨chǫ companies."
The transport companies are to be put up for sale this month with an anticipated deadline of February 7 for bids. Most of the companies' assets take the form of transport vehicles, with a limited amount of shop equipment.
Lost fuel contract
In a separate statement emailed to Cabin Radio, Brajer said Ventures West, Tłı̨chǫ Landtran, and the numbered companies – all four effectively operating as one organization – "had been experiencing significant losses for several years and were reliant on a small number of contracts, many of which were unprofitable."
Even one of the biggest contracts – a five-year fuel supply deal with an unnamed Northwest Territories diamond mine, which made up more than a quarter of the companies' revenue – "had historically been unprofitable," Brajer told the court.
Despite that, the companies submitted a bid earlier this year to renew the five-year fuel contract when it expired.
"In an effort to ensure a modest profit margin could be made on the fuel contract," Brajer stated in his affidavit, "the transport companies' bid for the upcoming five-year fuel contract included revised pricing as compared to previous years.
"However, the transport companies were ultimately unsuccessful in their bid to win the fuel contract for the next five years."
Brajer said without that contract, and after years of sustained losses, the companies were looking at losing at least another $9 million.
In a statement to Cabin Radio, he wrote: "Unfortunately, the decision was made to close the transport companies' operations and sell their assets, consisting mainly of trucks and trailers.
"We want to thank all the employees and suppliers of the transport companies for all your past support."
Brajer said closing the transport companies would allow managers at the Tłı̨chǫ Investment Corporation more time to focus on keeping other companies in the group profitable, for the good of the Tłı̨chǫ people.
A transportation manager with considerable experience working at one of the companies told Cabin Radio the news represented "a significant blow to the North."
While Brajer said 40 employees were affected, the transportation manager said "hundreds of truck drivers and yard personnel will suffer a bleak Christmas because of this."
The individual continued: "Truck drivers will not be paid for the loads they have hauled and owner-operators and lease operators will not be paid either.
"This will reflect on the upcoming winter roads. I am pretty sure that other companies in town have the capacity to take up the slack, but the reverberations and the effects on the Aboriginal community will be long-lasting."
The companies are considered ice road specialists. Much of their business comes during February and March each year, Brajer said in his affidavit, both working on the road itself and performing resupply runs along the Tibbitt-Contwoyto winter road to the diamond mines.
Including the transport companies, the Tłı̨chǫ Investment Corporation is responsible for elements of managerial and financial oversight on behalf of 22 subsidiaries.
In total, the corporation employs some 450 people – including many residents of Tłı̨chǫ communities.
Emelie Peacock contributed reporting.