by SUSAN MANN
Organic Meadow’s unsecured creditors voted in favour of a trustee’s proposal Tuesday morning that will return them about seven per cent of the money they are owed, and if approved by the courts, will allow the co-op to continue to process organic milk.
They had little choice. Otherwise, Organic Meadow would be deemed bankrupt and unsecured creditors would likely get nothing. Also, if the court doesn’t approve the trustee MNP Ltd. proposal, the milk processor would be deemed bankrupt.
Acceptance by creditors breathes new life into the challenged dairy processor. Later in the morning co-op members voted to accept support from new partners, which means the Organic Meadow brand “will live and continue to be strong,” says CEO Don Rees. “The brand is “critically important for the future of Organic Meadow co-op and the new partnership.”
The co-op has more than 100 family farm members. It’s in the organic dairy, egg, grains and frozen vegetables businesses.
At the meeting for Organic Meadow co-op members, the proposal to pay out creditors was “unanimously approved,” Rees says. As well, “they approved the carrying on of the co-op as a co-op and the loans and the shares to carry on as members’ participation in the co-op.” Rees described “an overwhelming amount of support.”
The co-op “will be part of the plans for the new Organic Meadow partnership,” Rees says, adding how the partnership will work hasn’t been finalized yet. “It’s a three-way partnership.”
Other members will be Meadowfresh, a subsidiary of Western Canadian-based Agrifoods International Cooperative Ltd. and Avrio Ventures General Partnership Ltd. “Avrio is going to stay involved as a financial investor in the company,” Rees says.
Lloyd says “DFO is optimistic that Organic Meadow will exit these proceedings with an opportunity to continue to serve the organic market in a manner that will allow it to succeed under its new structure.”
As for who will own Organic Meadow under the new arrangement, Rees says “it will be a partnership moving forward. It won’t be a sole co-op. We won’t know the details of the partnership for a while,” he explains. “The first hurdle was to get support of our creditors and we did an awful lot of work to do that.”
The kind of say the co-op members will have in the new partnership, is “ to be determined. They’ll have significant input because of the farm nature” of the partnership, Rees says.
Organic Meadow co-op representatives have held meetings with the Agrifoods co-op’s board and its members, Rees says. “There’s a very good feeling about moving forward.”
Organic Meadow has continued to operate during financial restructuring that began on April 2.
The co-op, headquartered in Guelph, owns all of the shares in Organic Meadow Inc., which in turn owns Organic Meadow Ltd. Organic Meadow Inc. owns the property, dairy processing plant and equipment used by Organic Meadow Ltd. for its operations.
Rees says unsecured creditors approved a joint proposal for Organic Meadow Inc. and Organic Meadow Ltd. that will provide them each with 50 per cent of the first $1,000 they are owed and then seven per cent of the money owing beyond that amount.
Unsecured creditor Dairy Farmers of Ontario, owed about $929,000 for milk deliveries to Organic Meadow in March that it hasn’t received payment for, voted in favour of the proposal. Graham Lloyd, general counsel and communications director, says by email DFO supported the recommendations of the trustee as “it felt it would be in the best interest of all parties and avoid formal bankruptcy petition.”
There are 37 members who loaned Organic Meadow a total of $760,543.92. The loans range from $100,000 to $2,001. Tony McQuail of Lucknow, who loaned Organic Meadow $100,000 about two years ago, says he didn’t attend the meeting.
Rees says the co-op is not repaying the member loans right now. “The discussion is around restructuring, rebuilding the co-op and moving forward.”
Organic Meadow co-op vice chair Ted Minten and Caryl Newbery-Mitchell, vice president of MNP Ltd., Organic Meadow’s trustee, couldn’t be reached for comment. BF
Comments
Organic Meadow Coop, Organic Meadow Inc, Organic Meadow ltd, who can keep track of it all, ?
I find it interesting that Organic Meadow CEO talks about the deal they have struck with Avrio and Meadow Fresh, yet he doesn't know what role will be for the Organic Meadow Coop farmer members, in the future and doesn't have a plan for paying for the $760,543.92 to the farmer lenders,
It seems rather sketchy that you would make a deal and not have the details of that deal flushed out to before you agree to the deal lol ?
Sean McGivern
From the recent talk in the farm community, this new " partnership" will see Avrio as a minority share holder and Organic Meadow coop will only have 2 or 3 percent ownership under the new structure, this way they can continue to tell people their co-op is alive and well, at the same time they put their head in the sand and don't care that the unsecured creditors only getting 7% of the money they are owed.
From what I can tell most coop members don't seem to have any idea what's going on,have been kept in the Dark and member who's ever quoted in the news stories, is Vis Chair farmer member Ted Minten.
Where has the Coop's president been on this whole matter ? and who is the Coop President, no one seems to know ?
it sure isn't posted any where on their web site I can find.
I am suspect that before long there will be some really upset up coop members once they figure this whole mess out, and if there isn't any then they have gather together the most naive group of farmers in Ontario, But I believe there are several very intelligent farmers in this coop who will figure this out and be outraged, and rightly so...
This whole mess reminds me of Great Lakes Organic Coop now defunct, they use always brag they got farmers the most money for their grain and they had the best markets cornered and it was mostly a big smoke show...
OM can blame DFO all they want but the reality is that this business had a long publically known history of over spending and under earning and a comedy of on going errors and ego that wouldn't let them realize they needed to change course rather then letting pride continue them down the same wrong path...
Sean McGivern
Ron McCoy from Cobden was elected in 2013 for a 3 year term as president/chair according to their Field to Fork publication. No idea where he is now.
I know absolutely zilch about Organic Meadows milk but some die hard Organic grain growers have recently stated that they are looking at abandoning certification as in the end they are not any better off financially than the guys farming conventional after all costs are considered .Maybe Organic will be more a Mom and Pop type smaller farm dealing in specialty markets . Consumers say they want and will pay for certain food production systems but their wallet at the grocery store says different. Feel bad for everyone that sold to them and didn't get paid. The investors,well that is a risk you take when you invest in any venture . Does DFO not have a bond or daily payment for milk delivered?
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