An Echo Bay aircraft refurbisher is poised to emerge from months of fiscal turbulence after a Toronto judge agreed Tuesday to sell the business to an Ontario numbered company.
Justice Michael A. Penny of Ontario's Superior Court approved the $5.5 million sale of Springer Aerospace Holdings Ltd. to a new corporation, 1000488927 Ontario Inc.
The deal includes all of Springer's lands and buildings at the Bar River Airport, and all shares in the aircraft maintenance, repair and overhaul business, allowing it to continue as a going concern.
Springer Aerospace had a highly skilled workforce of 100 employees on Nov. 23, 2022 when it entered insolvency protection under the Companies' Creditors Arrangement Act (CCAA).
It's now down to 60 employees and eight contractors.
"The proposed transaction allows [Springer] to continue as a going concern, which is in the interest of all stakeholders, including employees, suppliers, customers, and the northern Ontario economy," Judge Penny said.
"A going-concern sale preserves existing economic relationships and business opportunities including customer and employee contracts which will not need to be assigned or renegotiated, since they form part of the continued liabilities," he said in reasons for his decision released Tuesday.
To find a buyer for the troubled business, a court-appointed monitor shopped Springer to 350 potential bidders.
A dozen were interested enough to conduct due diligence.
A number of prospective purchasers expressed interest in closing a deal, but only one viable transaction persisted to the end of the sale process.
An unusual condition of the deal approved Tuesday will be a reverse vesting mechanism under which certain Springer liabilities will be transferred to another newly incorporated numbered company, which will be assigned into bankruptcy.
Justice Penny says this is necessary because Springer does business in a highly regulated industry.
"Their business requires numerous licenses and certifications, in Canada as well as in other jurisdictions where the customers’ planes are operated."
"None of [Springer's] licenses and certifications are transferable."
"A purchaser of assets alone would need to invest substantial time (estimated at two to three years) before it could obtain the necessary licences to operate this business.'
'This would involve time that [Springer] does not have and risks which no viable purchaser would undertake in the present circumstances."
"The purchaser could therefore not viably acquire [Springer's] business as a going concern except in a share transaction and 'reverse' vesting structure."
"I am satisfied the... structure is necessary and reasonable in the circumstances of this case," the judge said.
The lion's share of the $5.5 million purchase price will go to Caisse Desjardins Ontario Credit Union Inc., which is Springer's biggest creditor, owed $5.7 million.
Springer Aerospace's CCAA insolvency protection will continue until the later of the bankruptcy of the second new numbered company and April 30, 2023.