BC Tree Fruits, over $50M in debt, officially files for creditor protection

UPDATE 2:15 p.m.

Premier David Eby has announced millions in additional funding for British Columbia's beleaguered fruit industry, a day after a growers co-operative that has served farmers for almost a century filed for creditor protection citing more than $58 million in liabilities.

Eby said at a news conference Tuesday that the fate of the BC Tree Fruits Cooperative, which provided storage and packing services for farmers, is now in a judge's hands.

A petition filed in B.C. Supreme Court shows the co-operative received a repayment notice last week related to more than $50 million in debts to Canadian Imperial Bank of Canada.

The co-op's petition shows it is "non-compliant" with the loan agreements to CIBC.

A statement from the co-operative issued Monday said the decision to file for creditor protection stemmed from the group's "liquidity crisis," with stone fruit crops damaged by "unusually severe" weather this year identified as "the final tipping point" in a series of factors.

In mid-January, the Interior saw several days of frigid temperatures that killed off active buds in trees that had only just begun to recover from the 2021 heat dome and had gone through a harsh winter in 2022.

The petition says the harvest for cherries was cut by 85 to 90 per cent, while all other stone fruit harvests were "reduced to zero."

The petition says CIBC is "supportive" of the co-op's restructuring under the Companies' Creditors Arrangement Act. The law allows insolvent firms with more than $5 million in debt to restructure operations and temporarily stave off collection efforts.

As the co-op's lawyers were in court Tuesday, Eby and B.C. Agriculture Minister Pam Alexis held a news conference in Penticton, announcing supports for farmers.

The co-operative announced last month that it was shutting down due to "extremely low" estimated fruit volumes, and "difficult market and financial conditions."

The crisis, the petition says, had "been building for many years."

Filing for creditor protection in court was an effort to "maximize recovery for all stakeholders," the group's statement said.

The petition filed in court to start the process shows the co-op and a subsidiary had more than $111 million in assets as of last year, including several properties, though one Kelowna property worth $21 million is in the process of being sold.

The petition said the co-op and its subsidiaries had more than $58 million in liabilities as of last year, including the debts to CIBC, and amounts owing to growers and other creditors.

Eby said Tuesday that the province would monitor the creditor protection process "closely" and see what could be done to ensure that "key assets are protected," or if services that it used to provide might be able to continue through the proceedings.

"The co-op has had some big challenges. They had some governance issues that the province tried to support with some funding, they're facing some significant debt obviously," he said.

"It was not, I'm sure, an easy decision for the board to decide to wind up operations. It was quite sudden, from the provincial government perspective, and now we're in a situation where it's in court and we're going to make sure that we're doing all we can to protect farmers while recognizing that the co-op is now in this court process."

The Canadian Press

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ORIGINAL 10:25 a.m.

A hearing is scheduled today after BC Tree Fruits Cooperative officially filed for creditor protection on Monday.

The hearing is set to take place in B.C. Supreme Court in downtown Vancouver.

BCTFC is seeking a stay of proceedings and remedies for 10 days, the approval of interim financing and is requesting a comeback hearing on Aug. 23.

A news release from BCTFC says that on Aug. 6 the Canadian Imperial Bank of Commerce issued a demand for repayment of debts owed by the cooperative and its subsidiaries, Growers Supply Company Limited and BC Tree Fruits Industries Limited.

“Many factors that have led to this crisis, including decreasing tree fruit volumes, an increase in local packing house competition, aging facilities, aging equipment, market pricing pressures locally and from Washington state, a reduction in contracted BCTFC growers/members, and significant impacts from a changing climate,” notes BC Tree Fruits.

It says attempts to “right size” the business were met with multiple attempts to block property sales, make board changes or change board governance. Those disruptions delayed property sales and equipment installations, reducing protection grower returns.

“The final tipping point in the already precarious financial position of BC Tree Fruits was the unexpected and significant crop reduction caused by unusually severe weather pattern in 2024. As a result, the 2024 crop saw a reduction in volume by 85-90% in cherries and all other stone fruit were reduced to zero due to those weather events.”

On July 26, BC Tree Fruits announced its closure, saying it did so to give growers the opportunity to find other avenues to pack and market this year’s harvest.

At the comeback hearing, BCTFC will seek approval of a sale and investment solicitation process for the assets of BCTFC, and for such further and other relief as may be necessary.

Court documents indicate that the cooperative was $50 million in debt to CIBC and owes significant payment to members.

Premier David Eby, agriculture minister Pam Alexis and representatives from the tree fruit and cherry industries have a news conference scheduled for 11 a.m. in Penticton to update the work being done to support growers.