Area Finance bankrupt
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Updated: November 04, 2009 7:00 AM
Local companies Area Finance Inc. and numbered company 439288 B.C. Ltd. are now in the process of being placed into bankruptcy.
Director/secretary Carl Glenn Anderson, director/president Victor Montaldi and Gordon Anthony Shanks, sub mortgage broker of the numbered company, which subsequently became known as Area Finance were all previously investigated due to information being received on April 24, 2002 by the superintendent from the British Columbia Securities Commission (BCSECCOM).
Since this time there has been an outcry from investors desperate to receive their funds back.
In a 2004 BCSECCOM hearing into the troubled companies both Anderson and Montaldi guaranteed repayment of all the investors funds and pledged all of their current and after acquired assets as security for those guarantees.
This latest bankruptcy announcement deals another blow to the hundreds of local investors who combined invested a total of nearly $40 million into the companies.
Price Waterhouse Coopers have recently been chosen by the companies to handle the bankruptcy.
"Price Waterhouse Coopers have been chosen due to their familiarity with the companies and their operations.," said Doug Montaldi, company director and spokesperson.
"We expect that Price Waterhouse Coopers will be appointed as the bankruptcy trustee by the courts," he added.
The bankruptcy trustee will contact all the unsecured creditors including all of the debenture holders, of the companies to notify them of the time and place for the creditor's meeting.
According to Montaldi a creditors meeting is usually required to be held within 21 days of the companies being placed into bankruptcy.
"One of the purposes of the creditors meeting is to inform all of the unsecured creditors about how the bankruptcy is likely to affect the status of their debt or investment," said Montaldi.
Montaldi added. "The June 2009 Area Finance news letter was the first written document provided to the debenture holders that suggested that the company could be forced into bankruptcy. "
Montaldi also added that an October 2009 Area Finance news letter had been mailed to debenture holders between Oct. 5 and 9.
"The October news letter informed them of the reason the board of directors had decided to place the company into bankruptcy," he said.
According to Montaldi both Area Finance and numbered company 439288 B.C. Ltd. are in default under the terms of their debentures and had the option of seeking protection from their creditors in order to provide a proposal to restructure, or to declare bankruptcy.
In order for a proposal to be accepted it must receive 50 per cent plus one of the creditors to vote in favor of the proposal. Those creditors must control 66.67 per cent of the outstanding debt.
"A group of debenture holders who control over 33.33 per cent of the debt contacted the board of directors and instructed them to place the two companies into bankruptcy," said Montaldi.
"If this direction was not followed they had indicated that they would petition both companies into bankruptcy instead," he added.
"The costs related to placing the companies into bankruptcy are significantly less than if the companies should be petitioned into bankruptcy therefore the board agreed to the bankruptcy order," Montaldi said.
According to Montaldi there are approximately 465 creditors and investors, approximately 1,000 borrowers and a total of five staff.
It is unknown at this point the direction that the 465 local creditors will take.
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