In its 2021 fiscal year, Springer Aerospace chalked up $11 million in sales revenue, repairing, maintaining and overhauling aircraft from its three-hangar operation in Echo Bay, population 1,600.
That was up from $8.8 million from the previous fiscal year.
Christopher Grant, Springer's chief executive officer, says a big factor in that sales increase was a business expansion including a new $3-million hangar big enough to house two Boeing 737 aircraft.
"I believe the year-over-year increase in revenue is a result of business expansion, among other things," Grant says.
But for reasons that will be explored in forthcoming SooToday coverage, the Pride of Echo Bay was forced this week to seek protection from its creditors.
In an affidavit sworn on Tuesday of last week, Grant admitted there was less than a couple thousand dollars in Springer's bank account.
"While payments have historically been received promptly from customers, Springer has recently experienced delays in EFT [electronic funds transfers]," Grant stated.
"In particular, one large payment of approximately $150,000 was sent by a customer but was not received when expected."
"As at the date of this affidavit, the funds have not been located, adding to Springer’s immediate cash flow pressures," he said.
"Pursuant to the cash flow projections, Springer expects to be in a negative position as early as next week without interim financing."
"As of November 22, 2022, the company’s cash situation had deteriorated to $1,400 in its bank account given delays in receipt of wires and timing of accounts receivable."
"Absent an injection of cash, the company will not be able to make payroll this week," Grant warned.
To make things worse, Springer had not purchased director and officer liability insurance.
That meant its board faced potential personal liability to workers wanting to recover their missing paycheques.
So Grant applied for, and was granted, court protection for both his grounded aerospace company and his uninsured directors and officers.
Springer's biggest obligation is to Caisse Desjardins Ontario Credit Union Inc., which is looking to collect more than $5.7 million.
Granting Springer protection under the Companies' Creditors Protection Act, Judge Michael A. Penny of the Superior Court of Justice prevented any legal actions against Springer until at least Dec. 2, when the parties will be back in court.
Meanwhile, Springer has obtained $1.5 million in debtor-in-possession financing to continue operating and get through its planned restructuring.
"I believe that until marketing efforts for the going-concern business are exhausted, the business should not be shut down or liquidated," Grant says.
"Springer is engaged in a highly specialized service business and the value of its business and assets are maximized if it remains a going concern."
"The difficulty of re-starting the business once operations cease is magnified by the location of the business and specialized nature of its services and customers."
"It would be difficult to re-hire and attract employees to relocate to northern Ontario after a business closure," Grant said.