AER targets Lexin over alleged debt
CALGARY The Alberta Energy Regulator is suing insolvent Lexin Resources Ltd. to recover money it is allegedly owed, while the company’s receiver claims in a report that it is working to recover Lexin documents from garbage bags, a storage locker and even a women’s washroom.
Borden Ladner Gervais partner Robyn Gurofsky, acting on behalf of Lexin’s courtappointed receiver Grant Thornton LLP, asked an Alberta Court of Queen’s Bench judge Tuesday to approve a plan, negotiated with Lexin’s lawyers, for the handover of various recovered documents so the receiver can prepare Lexin’s assets for sale.
Gurofsky said the receiver must have the records to establish a data room and drum up interest for asset sales.
The negotiated plan will allow Lexin’s legal team to review documents in a limited period of time and then hand over documents not subject to lawyer-client privilege. Any records relating to emergency procedures or safety, however, would be immediately released to the Alberta Orphan Well Association (OWA).
Lexin was a relatively small natural gas producer in southern Alberta but its insolvency has outsized implications because it owned 1,514 well licences — many in partnership with 51 other energy companies — which could now become the responsibility of the OWA and double the number of wells under agency management.
The AER took the unusual step of pushing the company into receivership and is now demanding damages from the company. Lexin is appealing the AER decision with a hearing scheduled Wednesday. The AER’s amended statement of claim asks for $1 million plus “any amounts owed to the Orphan Fund.”
The claim also repeats the allegation, reported by the Financial Post, that Lexin owes the AER $70 million in deposits for well liabilities.
“It is not open for a licensee, when times get tough, to transfer the burdens associated with holding AER licenses to the AER and/or the OWA, which is exactly what Lexin is attempting to do here,” the AER’s suit alleges, adding that Lexin is trying to “fob off” its responsibilities.
The AER and receiver, Grant Thornton, declined to discuss the document recovery process, citing Tuesday’s court application.
A receiver’s report, filed with the Court of Queen’s Bench of Alberta on March 30, claims Lexin’s documents were recovered in various unusual places.
“The receiver notes that there are entire rooms, including the women’s washroom, containing an estimated 1,000+ banker’s boxes and filing cabinets, presumably containing Lexin records,” the report states.
The Alberta Energy Regulator also has Lexin records it seized from offices in downtown Calgary “located either in the garbage or strewn about on shelves,” and six racks of disassembled computer servers.