Article in Oct 7 Financial Post:
canoe.ca
"Gandalf to wind up as creditors queue
By JILL VARDY
Technology Reporter The Financial Post
OTTAWA -- Gandalf Technologies Inc. has laid out a formal plan to pay off creditors and wind up what remains of the company, court documents obtained yesterday indicate.
Creditors will get a chance to vote on the plan at a series of meetings, yet to be scheduled. Proofs of claim must be filed by Nov. 7. But it appears doubtful shareholders will get anything.
The documents show Gandalf has sold what's left of its equipment to help pay bonuses owed to its remaining employees.
Greenwich Industrial Services LLC has agreed to buy the services portion of Gandalf's business for an undisclosed amount. The money will be paid to Deloitte & Touche Inc., Gandalf's receiver, to
help pay bonuses due to a few of Gandalf's senior employees. They were offered the bonuses as condition of staying for 90 days, if the company succeeded in fetching more than $11.5 million for
Gandalf's assets. That 90-day period expires Friday.
"I doubt if you'll be able to reach anyone here after Oct. 10, said Diana Chenchusi, legal counsel for the company.
Chenchusi said "it's the same process as Eaton's," referring to the department store's own restructuring saga. But unlike Eaton's, Gandalf will not be a going concern after the restructuring is complete.
Gandalf's biggest creditor, Royal Bank of Canada, has already been paid out of proceeds from the sale of Gandalf's main technology business to Mitel Corp. on Aug. 8, for US$14.9 million.
Meanwhile, Gandalf's second tier of secured creditors include OE Financial Services Inc., Hewlett-Packard (Canada) Ltd., Zed Data Systems Corp., Manufacturer Finance Programs Ltd., Pitney Bowes and Newcourt Credit Group. The amount Gandalf owes these companies was not
disclosed. The third class of claims includes severance or termination pay for Gandalf's laid-off staff. Unsecured creditors will be paid after employees' claims. These include IBM Canada Ltd., which is owed $859,062. The city of Nepean -- where Gandalf is headquartered -- is owed $358,017 for back taxes. Diners Club is owed $67,074. The fifth class of claims includes debenture holders.
Court documents say the proceeds from the Greenwich sale will pay bonuses for about a dozen employees who were kept on after Gandalf sought protection from creditors under the Companies' Creditors Arrangement Act July 25 and fired 180 of its 339 staff.
The company was hammered by increased competition from larger rivals, mounting losses and a disastrous decision to switch from direct to indirect sales.
The court documents were filed late Friday, after Gandalf requested and was granted an extension to its original Sept. 19 deadline for restructuring.
In late August, US$1-million worth of Gandalf's office furniture and equipment was sold at public auction in Ottawa.
Gandalf has been delisted from both the Toronto and Nasdaq stock exchanges."
Mr. Bean |
