The Testori group of aerospace companies has hit another snag as it has been forced to seek protection from its creditors last month.
© Colin MacLean/Journal Pioneer
Wiebel Aerospace in the Summerside Industrial Park
On Dec. 19, P.E.I. Supreme Court Justice Ben Taylor issued an order that appointed PricewaterhouseCoopers as the monitor for Testori Americas and Wiebel Aerospace.
The companies, which employ about 110 people in Summerside and Bloomfield, can continue to run while under creditor protection.
In seeking creditor protection, Daniel Michaels, who is a director for Testori Americas and Wiebel Aerospace, provided an affidavit in which he said the two companies have about $14 million in annual sales.
Michaels said the companies are in default of their loans to P.E.I. Westside Funding, but a restructuring plan for the businesses is underway.
The affidavit also included a letter from Cyrus Global Holdings, which offered $2.5 million in financing to Testori Americas and Wiebel Aerospace as working capital.
Michaels said if Testori Americas and Wiebel Aerospace weren’t granted creditor protection, then P.E.I. Westside Funding could demand its loans and seize company assets. He said in that situation the companies wouldn’t be able to operate.
The creditor protection came after the provincial government sold its securities in loans to Testori for $5 million last March to Delaware-based P.E.I. Westside Funding.
At the time the provincial government entered into an agreement that guaranteed Testori Americas and Wiebel Aerospace would maintain 90 full-time employees for one year.
P.E.I. Westside Funding since filed a lawsuit against several parties in July 2013 seeking more than $13 million it said it was owed.
TMC Avion bought Testori Americas and Wiebel Aerospace in 2011 and has since been involved in a series of lawsuits unrelated to P.E.I. Westside Funding.
Those include a claim seeking more than $14 million in damages from the former owners of Testori Americas, Testori Interiors and Weibel Aerospace over allegations they provided incorrect financial information and overvalued the businesses prior to the sale.
There are also allegations of racketeering in California with TMC Avion alleging several people tried to defraud the company of any benefit from its purchase of businesses that included Testori Americas. One of those men in turn sued TMC Avion, saying he wasn’t paid for consultant work.
With the creditor protection, there is also an order that grants a stay of proceedings against the Testori companies for at least 30 days.
Summerside Mayor Basil Stewart says he is concerned about the number of jobs involved.
“I certainly wish them well ... hopefully they can get their legal situation sorted out and get things back on track,” he said.
Opposition Leader Steven Myers said news of the companies seeking creditor protection was sad.
“Nobody knows what the future holds up there but it doesn’t look good,” he said.
Myers previously questioned the province’s sale of the loan securities and after hearing about the creditor protection order, he said the Opposition was concerned at the time that the government was turning its back on the company.
“It’s a little worrisome to think that now the government has no involvement in it because they gave it up, they’re washing their hands of it,” he said.
An attempt was made to contact Innovation Minister Al Roach for comment but a spokeswoman for his department said he was out of the province.
With files from Colin MacLean/Journal-Pioneer.