Lentils loading at Viterra’s Port Giles terminal. Photo: Viterra

A CANADIAN court has appointed KPMG Inc. as receiver of pulse trader Marina Commodities (MCI), its Australian subsidiary (MCA) and related non-operating entity Ausican Commodities, after the company was placed into administration.

Headquartered in Ontario, MCI traded and exported lentils, peas, chickpeas, beans, and other specialty crops to international buyers.

Its website listed the company as sourcing kabuli and desi chickpeas and red lentils (robin and futball) and red spit lentils from Australia.

As of 31 July, MCI owed an estimated US$47.57 million to its secured creditor, the Canadian Imperial Bank of Commerce, and unknown amounts to HSBC Bank Canada and Mercedes-Benz Financial.

The three entities also owe approximately $14.33M to unsecured creditors.

According to court documents, the Australian company has 75 unsecured creditors, with debts ranging from more than $700,000 to just $13.

These include farming entities and grain trading companies from Queensland, New South Wales, Victoria and South Australia.

The largest debts were owed to Australian Grain Export, $714,648; Associated Grain, $551,304; Dale Smith Farming Pty Ltd, $535,750; J P Harris & Lr Harris & Jp & Lr Harris Glendyle Ag T/Afamily Trust, $523,784; Agt Foods Australia, $327,491; Chester Commodities Pty Ltd, $321,078.

There is also an intercompany debt of about $4.8M is outstanding between MCA, as lender, and MCI, as borrower, according to current information.

Documents also show MCI’s failure to pay suppliers had led to the cancellation of shipments, causing the value of its inventory in Canada and Australia to fall from US$24.9M in June to US$4.6Min July.

In Australia, the value of MCI’s reported inventory fell from US$8.9M in June to US$3.8M in July.

Receivership application

It was CIBC that commenced legal proceedings against MCI on 13 August Ontario Superior Court of Justice, seeking to place the company into receivership.

In the court filing, CIBC – also listed as an Australian security trustee – alleged that it had learnt that MCI had made “material misstatements in borrowing base certificates” which featured “material inventory and receivables that do not exist or should not have been included”.

As a result, the bank said it had advanced about $50M but that the loans were undercollateralised by at least $36M.

CIBC said that MCI were “in default of their loan and security agreements” and that it had “demanded repayment and delivered statutory notices of enforcement”.

“[CIBC] has taken steps to address the material issues with the Debtors but has not received satisfactory responses.

“As [CIBC’s] exposure continues to grow by the day, the appointment of the Receiver to safeguard the Debtors’ assets and manage operations is critical to protect the [CIBC’s] bona fide interests, and prevent its apparent losses from growing.”

MCI didn’t oppose the application.

Aus operations

MCA had a business address listed for Christies Beach, Adelaide, South Australia.

Court documents state nine employees were based at the head office with one located at SA who received “back-office support from individuals employed in India”.

According to the documents, MCA sourced inventory from Australian growers for the MCI business before it was sold by the Canadian company to customers.

MCA did also sell a small portion of inventory directly to customers.

Other than the South Australian site, the company had a lease for what appears to have been an office at Eight Mile Plains in Brisbane, which has since expired.

The documents also list 14 “bailment locations” connected with MCA, mostly independent grain storage and handling sites across the east coast and South Australia.