To be clear, being under a CCAA court order is not a bankruptcy and the board of TLC remains in control of the properties. The counter appointed monitor will review the finances and work on a restructuring of TLC that works for all concerned. The CCAA court order gives TLC breathing room to restructure but if this process does not work bankruptcy can happen. In a bankruptcy TLC would come under the control of a trustee with the mandate to liquidate the organization for the benefit of the creditors. We should know sometime this fall if bankruptcy can be avoided. I have no desire to see TLC in bankruptcy because of the important work it does as a land trust.
I like land trusts as a model to protect important private lands. I was impressed ten years ago with the very public aggressive way TLC was protecting properties. I had no idea it was based around mortgaging properties and hoping donations and grants would be enough in the future to cover shortfalls needed to buy properties. Since I first raised my concerns about five years ago I have been crapped on by loyalists of TLC for attacking the good work TLC does. They do not seem to be able to separate the work of TLC from the long term sustainability of the organization. The actions of founder Bill Turner could not be questioned because he was a saint and hero.
Recent Financial Data Not Available
It is hard for anyone outside of the board to know what the current state of TLC finances are. The last data we have is the unaudited 2012 financial statement for the fiscal year to April 30th 2012 . The last audited statement only takes us to April 30th 2011. With TLC audited statements are important to see because the finances of a land trust is very different than other organizations. Capital donations and capital assets obscure the actual financial state of the organization and it is in the notes of the auditor that you see the details needed to understand the real financial state of the organization. Much has happened since the last financial statements came out and I do not know if it has gone well or not.
We are also going on more than 2 years since the last annual report came out.
I have been worried about the state of the TLC for many years now because of how it was financed. Land conservancies should be structured in such a way that no matter what happens there are the funds to ensure the land is protected. A land conservancy should be thinking in terms of hundreds of years and not rush into anything. Taking out a mortgage on any property is something that should almost never happen. If it does happen it should be either for a very short term to bridge between a sale and when the money is in place or be used as an insurance if something catastrophic happens.
TLC has only been around for 17 years and has been in financial straits for about five years now. Through my contacts back in 2008 I knew that TLC was on the wrong track and was very glad when in early 2009 the board took action and removed Bill Turner as executive director. There were financial problems then but not insurmountable ones. I became really worried when in August of 2009 at a extraordinary general meeting a almost entirely new board was elected and the work of the previous board was undone. The new board brought back Bill Turner and things went back to how they had been before.
The newly elected board in August of 2009 acted out of loyalty to Bill Turner and I think hoped his passion would be enough to fix the problems. Several of the new board members resigned when they understood the status quo was not going work.
The new board hit the financial cross roads in the summer of 2012 and ended up having to take much more dramatic action than was done in 2009. It seems they may have left it too late.
The AGM last year was delayed by several months during the financial crisis that hit when the bank accounts were frozen by CRA in August. The current court order means the AGM this year will be delayed again. It is unclear when the next AGM will be as the court has adjourned the application for relief related to the Society Act and its Bylaws till November 4th.
The AGM date is important because the board does need to provide the members with some sort of financial update at it.
Creditor Protection Means More Financial Liability
The creditor protection allows for up to $550,000 in interim financing. The creditor protection process is not free and Wolridge Mahon Ltd as the monitor of the process can charge up to $500,000. The loan and the payments to the monitor of the process are secured against a number of properties:
- Abkhazi Lot 1 and Lot 2
- Keating Farm Estate in the Cowichan Valley
- Binning House in West Vancouver
- Monk's Point Park in Tofino
- Ross Bay Villa Lot 2 and Lot 3
- Second Lake located between Mount Work and Lone Tree Hill. It is not open to the public but some of the property is leased for a residence.
What this means is that if the re-structuring does not work out the new creditor and the monitor have the right to be paid what is owed to them out of the sale of these properties. $1,050,000 is a significant liability and is unlikely to be covered by the current cash flow based on what I have seen of TLC. The liability may not be this high in the end but I can not see how adding any new liability to TLC is sustainable.
The Way Forward
TLC owes enough money to enough creditors unwilling to make their loan a donation that they are between a rock and a hard place. Even if the sale of some properties is enough to pay off some of the debts, I worry that TLC has harmed their ability to raise enough money to continue into the future. I think the only realistic solution now is for another well funded land trust to take them over.
Either the Nature Trust of BC or the Nature Conservancy of Canada could take on TLC. Though their mandate is protection of natural lands which means properties like Binning House, Ross Bay Villa, Abkhazi Gardens and Keating Farm Estate do not really fall into their mandate. Many of the TLC properties would be better suited to be taken over by the Heritage Canada Foundation though they do not seem hold properties themselves.
I really, really hope that TLC is using this court ordered breather from creditors to negotiate a take over by one of the much bigger land trusts in Canada.
A TLC 2.0?
I am very concerned that Bill Turner and Ian Fawcett have created what seems to be TLC 2.0 - the National Trust for Land and Culture (Canada) with the first provincial chapter being the National Trust for Land and Culture (BC). Apparently according to the Vancouver Sun article from Tuesday, Bill Turner thinks his new organization can take on some of the properties. I have to wonder where he will find the money to do this.
Bill Turner is also the Vice President of the International National Trusts Organization which he was instrumental in creating about eight years ago. TLC was a founding member of INTO but it is no longer a member but the new National Trust for Land and Culture (BC) is a new associate member This brand new organization seems to have replaced TLC. It makes me wonder if NTLC(BC) was created so Bill Turner could continue as Vice President of INTO.
No comments:
Post a Comment