Creditor protection granted for huge firm
Walton International Group Inc. and numerous related companies that form part of an organization administering 42,490 hectares of land for development projects across North America — including Edmonton — has received creditor protection.
A Calgary judge granted the protection last week giving time for Walton International, the main Canadian operating entity, and about three dozen other investment, development and management companies to restructure under the Companies’ Creditors Arrangement Act.
These applicants are part of Calgary-based Walton Group, made up of hundreds of trusts, corporations and partnerships in Canada, the U.S. and Germany, according to documents filed by monitor Ernst & Young.
The privately owned firm has thousands of investors who have bought corporate bonds or purchased units in partnerships that either develop land or hold vacant property until it can be sold.
The nine Edmonton developments listed on the company’s website include the jointly-owned 101-hectare Henday Industrial Park, new homes in the northeast McConachie neighbourhood and the west end community of Hawks Ridge at Big Lake.
Documents cite an affidavit by chief executive William K. Doherty stating the Walton Group administers land investments and development projects cover 32,375 hectares in the U.S. and 10,117 hectares in Canada through an “extremely complex” structure of more than 600 corporations, limited partnerships and other entities.
Doherty says Walton International Group lost $67.3 million over the last three years, mainly as a result of the drop in the real estate market caused by Alberta’s recession. Around the same time, new securities regulations made it harder to raise funding from small retail investors, leading sales for development projects to drop to $19.7 million last year from $134.5 million in 2012, the affidavit says.
North American staff at the applicant companies, most of them in Calgary, has been cut to 96 employees from 469 employees in 2013.
The applicants and a dozen other firms form a small part of the Walton Group, and the other members aren’t part of the legal proceedings, an Ernst & Young report says.
“Management currently anticipates that most if not all of the non-applicants will be able to successfully continue in business without requiring CCAA protection. However, it is possible that some entities which are currently non-applicants will have to make application to be included,” the report says.
“This could occur if their creditors choose to make demand for payment of loans, refuse to make further advances on loans or take other actions which adversely affect the operations of non-applicants based on the admitted insolvency of the Walton applicants.”
The applicants will need interim financing to continue operating after the judge’s initial order expires May 26, the report says. They’re expected to return to court for approval of that financing May 9.
The company and its affiliates have been among the largest players in Edmonton and Calgary’s development industry for more than 35 years — a 2006 Journal story indicated Walton managed a total of 6,070 hectares in the two centres.
This includes most of the land in Edmonton’s northeast Horse Hill area, where farmers and food activists fought to preserve largescale urban agriculture in the face of proposals for residential development. In 2006, a Doherty family non-profit organization donated land and money to help build Edmonton’s Our Lady Queen of Peace children’s camp beside the North Saskatchewan River.