Court documents have detailed the dire financial position that led Springer Aerospace to begin the restructuring process under the Companies’ Creditors Arrangement Act.
Springer, an aircraft maintenance company in Echo Bay near the Sault, has been open since 1972 and employs 100 people.
Like a lot of businesses, it was hard hit by the COVID-19 pandemic. In particular, the company had gone through a major expansion just before the pandemic hit.
“Springer experienced major disruptions to its business as a result of the COVID-19 shutdown and resulting impact on the travel and aviation industry,” the company said in its court filing.
“The pandemic exacerbated existing operational inefficiencies following a rapid expansion by the company and growth initiatives designed to increase top-line revenue.”
With the aviation industry shut down, revenues tanked and the company’s inability to make their debt payments alarmed Caisse Desjardins Ontario Credit Union Inc., the company’s primary lender.
“In total, $5,747,228.31 was outstanding to Desjardins as of July 2022,” the court document said.
“Springer is unable to pay the amounts outstanding to Desjardins. In addition, Springer has accrued payables in the ordinary course of its business, including unsecured trade payables in excess of $1.6 million and property taxes of $186,000.”
With Desjardins demanding payment, Springer was in a tough spot by November of this year, when its bank account held just $1,400.
“Absent an immediate cash infusion, Springer will not be able to make payroll this week,” the filing said.
“Desjardins declined the opportunity to be the provider of the needed interim financing.”
The court ruled that the company was a strong candidate to successfully restructure, in part because of its track record and the fact it’s having difficulties primarily because of the pandemic.
“It has trained and retained a skilled workforce through the COVID-19 pandemic,” the court said.
“It has developed a reputation and expertise in a specialized industry and its customers are large corporations and governments who rely on Springer’s services. The monitor concurs that the applicants represent a viable business. While the CCAA filing may cause some disruption to the business, a shutdown or liquidation would likely effectively terminate operations with little or no chance of recovery.”
The ruling allowed Springer to access a $600,000 DIP loan – emergency financing to keep the company operating during the restructuring process.
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