A Nova Scotia judge approved an application Wednesday to protect Atlantic Canada’s largest newspaper company from its creditors as SaltWire Network Inc. tries to emerge from insolvency with a restructuring plan.
Nova Scotia Supreme Court Judge John Keith also appointed a monitor to oversee the process under the Companies’ Creditors Arrangement Act, which allows companies with more than $5 million in debt to avoid bankruptcy while drafting a plan that ensures creditors receive some payment for what they are owed.
The emergency court hearing in Halifax was beset by legal wrangling because SaltWire wanted a different monitor than the one suggested by the private equity firm Fiera Private Debt, which has claimed in court it is owed $32.7 million, plus almost $600,000 of accrued interest.
SaltWire publishes four daily newspapers: the Chronicle Herald in Halifax; the Cape Breton Post in Sydney, N.S.; the Guardian in Charlottetown and the Telegram in St. John’s, N.L. — as well as 14 weekly publications in every Atlantic province except New Brunswick.
On Monday, Fiera filed court documents saying it lent money to SaltWire to help pay its 2017 acquisition of more than two dozen newspapers in Atlantic Canada from Transcontinental Inc. SaltWire has said debt from the acquisition and other financial pressures placed “an unsupportable strain” on the company.
In its filings, Fiera has said SaltWire and its affiliated companies have been in default for more than five years, during which time they have made little progress in repaying their debts — and they have no plan to do so. Fiera also said it provided “significant concessions” to the borrowers through several forbearance agreements, which SaltWire has ignored.
On Wednesday, SaltWire Lawyer Maurice Chiasson told the court that Fiera’s suggestion for a monitor — Toronto-based KSV Restructuring Inc. — would be a bad choice because the company has acted as Fiera’s financial adviser since October and has no presence in Atlantic Canada.
Chiasson asked the judge to appoint a monitor from Grant Thornton’s Halifax office, but Keith rejected that request, deciding KSV would lead the restructuring because SaltWire had earlier entered into a contractual agreement with Fiera regarding the process.
As well, the judge dismissed SaltWire’s claim that KSV had been difficult to work with as Fiera’s financial adviser, saying that strain was natural and he was confident KSV could maintain its impartiality and independence as a court-appointed monitor.
As the hearing drew to a close Wednesday, Keith approved debtor-in-possession financing for SaltWire, which will allow the financially distressed company to keep paying its bills until March 22, when another court hearing will be held in Halifax to discuss details of the restructuring plan.
KSV president Bobby Kofman confirmed that Fiera will provide $500,000 in interim financing.
SaltWire’s Chronicle Herald has confirmed in a published report that company president Mark Lever will step down throughout the creditor protection process “as he seeks to pursue the option of securing the company’s assets.” During the Wednesday’s court hearing, Fiera lawyer Jennifer Stam confirmed Lever would be stepping down “to make a bid,” but she did not offer details.
Outside the courtroom, Lever declined to offer any comments.
This report by The Canadian Press was first published March 13, 2024.