(TSX - V: UZZ)
EDMONTON, June 11, 2013 /CNW/ - United Protection Security Group Inc. and United Protection Services Inc. (the "Companies") became officially bankrupt on June 10, 2013, by operation of the Canada Bankruptcy and Insolvency Act.
The Trustee in Bankruptcy is Meyers Norris Penny LLP ("MNP").
The bankruptcy followed after the Companies' U.S. based lender issued a default notice and immediately stopped all funding on Wednesday, May 29, 2013. This action made it impossible for the Companies to carry on business in the ordinary course or arrange for an orderly sale or disposition of the business. The Companies filed for protection under the Bankruptcy and Insolvency Act on May 31, 2013. During the ensuing days, a major competitor stepped in and took over most of the Companies' large accounts, ensuring service continuity and, in most cases, continued employment of the Companies' security guards. However, many security guards have not been paid by the Companies. During this period the Companies were unable to successfully negotiate any interim financing or reorganization proposal and was not able to complete its proposal under the insolvency legislation, leading to it officially becoming bankrupt.
One of the first tasks of MNP is to work with all unpaid employees and file applications for financial assistance under the Wage Earner Protection Program, known as the "WEPP".
The direct cause of the Companies failure was the lack of funding by its lender. It appears that the lender imposed a series of questionable and possibly unjustified charges on the Companies' credit facility during the first part of this year, which had the effect of rapidly reducing the Companies' available credit margining, which in turn led to first one, and then a second default on the Companies semi-monthly filing and remittances to the Canada Revenue Agency for payroll deductions. Those defaults led to the lender issuing its default notice and freezing the Companies' funds and incoming revenues.
Former management of the Companies will consider what next steps, if any, may be taken regarding this conduct.
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE United Protection Security Group Inc.