Angry in the Great White North

Here is a letter from The Credit River Company that was received by someone who was seeking payment for services rendered.

You can see the original letter from The Credit River Company here in PDF form.  I'll retype it as well:

The Credit River Company
Box 461 Campbellville Ontario L0P 1B0

15 August 2006
To: [redacted]

Thank you for your response to our recent letter asking if you were an unsecured creditor of the Caledon Inn, The Cataract Inn or the Belfountain Village Store.

As mentioned, the Credit River Company has ceased operations at those locations, and our business efforts there have collapsed.  The company is in the process of being wound up, and has exhausted its resources.

However, now that an audit of existing claimed unsecured creditors is complete, and prior to closing our books, we are willing to offer incomplete payment on the amount outstanding as a show of goodwill.  We wish there were sufficient funds to pay the amount claimed, but that is not the case.

1. Should you choose to accept this amount offered, as full and complete payment of your account with Credit River Company and its former operation companies, please sign and return the enclosed form, and a cheque will be sent to you immediately upon receipt.  We require this informaton by 31 August 2006 in order to honour the offer of payment being made herein.
2. If you do not accept this offer, the normal avenues of recourse are available to you.  Please note that your claim is unsecured, against a corporate entity, and any action against any individual will be disallowed.

Direct any further correspondence to the above address.

Sincerely,

ACCOUNTS PAYABLE
The Credit River Company Inc

What follows on page two is a form with all the regular verbiage about debts being considered to have been met in full and no further action to be taken and so on.

Now by sheer dumb luck, I have a pretty good sense of what is going on here, because back in May, I wrote a piece reviewing the history of The Credit River Company, which was owned by Garth Turner, Liberal MP for Halton.

In June of 2006, Garth Turner was telling The Parliamentary Review that he ran The Credit River Company and that they had "brought back as viable businesses many heritage buildings".

This was at odds with what was reported just a few weeks earlier in May 2006, when Garth Turner was reported to be winding down his business:

And just like that, Belfountain's retail tycoon has fired himself right out the door of the village store.

And of the Cataract Inn.

And of the Caledon Inn.

All three operations—the beating heart of Garth Turner's The Credit River Company—have been sold, although the heritage buildings themselves remain with the genial shopkeeper and wannabe Tory cabinet minister from Halton Region.

Why was he winding down if the "many" businesses were "viable"?  Garth Turner himself suggested that it was because he was too busy now that he was re-entering public life, and nothing more:

Mr. Janke, what is the point of this post? How does it relate to my role as an MP? Am I not allowed to wind down a previous business after being elected? Are you stalking me? -- Garth Turner

But now we have this letter in August 2006 that suggests that The Credit River Company had gone bankrupt:

As mentioned, the Credit River Company has ceased operations at those locations, and our business efforts there have collapsed.  The company is in the process of being wound up, and has exhausted its resources.

Of course, an unsecured creditor is out of luck when a business goes bankrupt.

But did The Credit River Company really go bankrupt?  The word "bankruptcy" didn't appear in the letter.  It just said that it has no money to pay this person for services rendered.

No attempt was made to say that the money was not owed, or that the services rendered were inadequate.  Just that the money wasn't there -- take some fraction of what's owed or see you in court.

If so, how did Garth Turner's company remain in the possession of the "genial" Garth Turner? 

Something is not tracking here.  If The Credit River Company had indeed gone bankrupt, then certainly the properties would have been sold to raise funds to pay off creditors. 

What the...?

Time to figure this out once and for all.

Off to the Ministry of Consumer and Business Services! 

So I pull the corporation profile report for the The Credit River Company.

And guess what?  No bankruptcy.  Indeed, the company is still in operation, being founded on February 11, 2002, and having last filed a return on August 9, 2008.  And Garth Turner is still the director!

What about the business of lacking funds to satisfy creditors?  What about The Credit River Company being wound down?

It gets weirder.  Here is a portion of the report of the land registry office concerning the Cataract Inn:

According to the land registry office, Cataract Inn, one of the properties Turner said was owned by The Credit River Company, was actually owned by The Cataract Inn Ltd.  Cataract Inn Ltd transferred the property to Lynn Bonner Holdings on October 27, 2006.  On that same day, The Credit River Company took back a mortgage on the Inn from Lynn Bonner Holdings for $675,000.

This is a vendor take-back:

A type of mortgage in which the seller offers to lend funds to the buyer to help facilitate the purchase of the property. 

So the allegedly insolvent Credit River Company essentially lends Lynn Bonner Holdings $675,000 to purchase the Cataract Inn with Lynn Bonner Holdings making payments to The Credit River Company Inc.  This happens in October 2006, just weeks after the business-efforts-there-have-collapsed letter went out from The Credit River Company to its creditors.

Cataract Inn Ltd and The Credit River Company Inc are different, right?

Not according to Lynn Bonner.  According to her, when she she first leased the property in May before purchasing it in October, she was leasing it from Garth Turner:

Bonner leased the Cataract Inn on May 1, 2006. Both it and the Village Store properties are owned by outspoken Member of Parliament Garth Turner - a man who seems like a walking headline. Turner was turfed from the Conservative Party, sat as an independent, and most recently has joined the Liberals. More importantly to Bonner's business story, though, he decided to lease two properties that she admired, just at a time that she was in the market.

The exact nature of the relationship between The Credit River Company and Cataract Inn Ltd. is not known.  However, it can reasonably be assumed that they are under the common ownership of Garth Turner (who remains the sole officer and director of both companies according to Ontario Ministry records).

So by October, The Credit River Company had a paper instrument worth $625,000, while telling creditors in August that there were no funds and that the company was winding down. 

I should point out that on September 8, 2008, The Credit River Company transferred the mortgage on the Cataract Inn to Cataract Inn Inc.  I haven't been able to figure out who is behind this new company.  No cash changing hands is listed along with the transfer.

The Credit River Company would not just give the Cataract Inn to Cataract Inn Inc. Perhaps Cataract Inn Inc is another Turner company?

Did Garth Turner send this letter out in August 2006 in order to clear the decks?  Was he trying to get creditors off his back by offering repayment at bankruptcy rates (cents on the dollar, usually)?  Once the creditors, who were now thinking that The Credit River Company was about to shut down for good, took the deal and wandered off with their pittance payments, was the plan to then transfer ownership of the Cataract Inn from Cataract Inn Ltd to The Credit River Company, both Garth Turner companies, through a vendor take-back mortgage for Lynn Bonner Holdings, and getting a $50,000 cash infusion to boot?

I bet the creditors would be steamed to hear about this.  Many of them probably took Garth at his word because of his status as an MP. If they only held out a bit longer or dug a little deeper, The Credit River Company would have been sitting on an asset worth $625,000 and quite possibly had other assets when the letter was sent.

Oh, and the amount of that original creditor's claim?  Around $5,000.  That's it.

The bottom line is this:  We have a letter from August 2006 in with Garth Turner's The Credit River Company is telling creditors to take a fraction of the moneys owed to them because the company is winding down and ceasing operations.  Then in October 2006, The Credit River Company is part of deal in which it appears to have contributed three-quarters of a million dollars in a vendor take-back.  And the corporate profile for The Credit River Company shows the company still up and running today, under Garth Turner's control.

Very odd.

Update: Documentation links have been added in.  Sorry for the delay in getting soft copies.

Good Question:  Jill poses an excellent question:

Was this communication accompanied by a covering letter/information with respect to other creditors/assets by a Trustee or Supervisor appointed by the bankruptcy court? If not, it sounds a bit like a 'do-it-yourself' Consumer Proposal.

This was a direct mailing from The Credit River Company.  It also appears to have been sent to all creditors, and not to particular ones (though that is tad more speculative).  There is definitely no mention of a Trustee or other third party that you would normally associate with the fair administration of bankruptcy proceedings for all involved.