Indigenous Ont. gas bar chain claims it is being unfairly affected by former supplier's insolvency

Gen7 Fuel's Jocko Point location in April 2022. (File photo/Supplied/Gen 7 Fuel)

A retail chain of Indigenous-owned retail gas stations and convenience stores in Ontario is claiming its finances are being impacted by the restructuring of one of the company's former fuel suppliers.

Gen7 Fuels said the court-appointed monitor in the financial restructuring of Original Traders Energy Ltd. (OTE), KPMG, has deliberately caused its banking partners to restrict access to its accounts and freeze assets.

Gen7 Fuels has six locations in Ontario – including two in northeastern Ontario, one in Nipissing First Nation and another in Batchewana First Nation -- each majority owned by First Nations community members.

“By combining their resources, they are able to purchase quality fuel at reasonable prices and compete with large oil brands,” the gas station chain said in a news release.

Gen7 was OTE's largest single customer purchasing often five million litres or more of gasoline products a week, but in the summer of 2022, OTE abruptly cancelled all contracts with Gen7 without notice, leaving the chain to find alternative fuel supply.

Since then, Gen7 Fuels has not had any business relationship with OTE.

In January 2023, OTE filed for insolvency protection for multi-million-dollar debt through the Canadian Corporate Creditors Arrangement Act (CCAA) process.

At that time, KPMG was selected by the court to manage the business’ restructuring through the CCAA process.

Gen7's claim

Mat Mcleod, president of Gen7 Fuel and member of Nipissing First Nation. (Supplied/Gen7 Fuel)

“We have no role in OTE's CCAA process,” said Mat McLeod, the president of Gen7 Fuel and a member of Nipissing First Nation.

“We are not a creditor nor owe the company any money. As a customer, we stopped doing business with OTE in 2022.”

McLeod said he feels the previous business relationship with the insolvent company negatively impacted the gas station chain.

"Each time KPMG has told one of our banking partners to refuse our business, the banks have followed the court-monitor's advice,” said Mcleod.

"However, once we've been able to meet with our banking partners and explain that we have no relationship to the OTE and its CCAA process, the banks have resumed their relationships with us, at least temporarily.”

Gen7 said its reputation has been harmed and the continued attacks on its banking arrangements has impaired the company's ability to manage the millions of dollars a day in fuel and convenience store transactions.

KPMG responds

In a statement emailed to CTV News, KPMG confirmed it is the court-appointed monitor for OTE and that Gen7 is not part of those CCAA proceedings. The company also denied any wrongdoing in the matter.

"KPMG is the court-appointed monitor of the OTE Group’s application under the Companies' Creditors Arrangement Act," reads the statement.

"Gen7 Fuel is not part of these CCAA proceedings and we have not had the alleged discussions with Gen7’s banking partners."

KPMG said they take their duties as the monitor seriously and act in accordance with all requirements.

"We deny all allegations of wrongdoing on the part of KPMG," said the company.

KPMG referred the public to their website for updates related to this CCAA proceeding. 

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Gen7 reviewing options

"We are reviewing our legal options to prevent any further harassment and potential interruption of our business,” said McLeod.

“KPMG is not only harming us, it is also threatening the financial welfare of our employees, suppliers and the Indigenous communities we serve.”