Blachford files for bankruptcy, owner apologizes for not meeting 'obligations' to staff and guests

The future of an iconic remote northern lodge is unclear as the owner filed for bankruptcy late last week.

On March 24, Taiga Sports Fishing Ltd., the company operating Blachford Lake Lodge, entered bankruptcy proceedings. Late Monday afternoon, Mike Freeland, the owner of the lodge, emailed a letter to media outlets acknowledging the bankruptcy and apologizing for the situation.

He said Blachford's resources were depleted after the pandemic, but they experienced a record number of visitors shortly after.

"Unfortunately, prices were insufficient to accommodate the extreme inflationary pressures that would drive up our cost of doing business," Freeland wrote.

"I am personally devastated about how things turned out and am truly sorry that we were not able to meet our obligations to our staff and guests to provide an experience of a lifetime."

The lodge, including five log guest cabins, staff quarters and all other parts of the operation, was listed for sale for $3.9 million a few days before the owners declared bankruptcy, but the listing has since been taken down.

"By offering the lodge for sale, it was our hope that the new owners would inject the resources needed for Blachford to continue to offer the level of service that has made Blachford famous," Freeland wrote.

Located 100 kilometres east of Yellowknife, the lodge has been in operation for about 40 years.

'Can we cut some costs here?'

Doug Hoyes is a Toronto-based insolvency trustee who is not involved in the Blachford case.

But speaking with Hilary Bird, host of CBC's the Trailbreaker on the process of bankruptcy, he said he assumes Blachford attempting to sell before filing for bankruptcy is pretty standard.

"I assume that what they did was what every business does in this situation. They, you know, try to scramble. Can we cut some costs here? Can we find some new investors? Can we increase our business?" he said.

"Those efforts ended up becoming fruitless, and that's why it resulted in a bankruptcy filing."

The filing says Blachford has $3.4 million in debt and $1.2 million in assets.

Hoyes said the appointed trustee will now liquidate the assets, essentially turning whatever is left into cash which will then pay the debts.

Hoyes said the logical step would be to find a buyer for the entire business, as they wouldn't get much for the individual items.

"It's already set up, you already have a bunch of clients that want to come and stay there."

Hoyes said the only other alternative "would be a really rich person that wants a 10-acre property with a lot of guest houses on it.

"So I guess if you got Elon Musk's number you can give him a call and see if he's interested."

Once the assets are turned into cash, there is an order to who gets paid first, Hoyes said.

"In really simple terms, the government gets paid first," he said, explaining that HST and GST charged to customers and any taxes being held from employees salaries in trust needs to be repaid back.

Employees left out of the loop

Employee wages would likely come next.

The lodge's assistant manager, Martina Pennell, told CBC News the 12 staff at the lodge got the news just as they were about to start what they expected would be another busy 12-hour day. The 25 guests at the lodge were flying out and another 25 were scheduled to fly in.

"So we went in ready for the day and during our morning meeting we received an email from the owner saying, effective immediately, all operations would cease and we had to pack our bags and be out on the final plane, which was in just a couple of hours," she said last week.

Hoyes said it could take a long time to sell off all the assets, meaning it could be a while before employees get paid.

After employees come the secured creditors, which Hoyes explained includes anyone who has debt attached to the facility, like a mortgage.

"Those people get paid at the top of the list because they lent money specifically towards a specific asset," he said, adding he has no idea if there are mortgages or other secured creditors associated with Blachford.

Hoyes said at the bottom of the list is everybody else, such as food suppliers.

The first meeting between creditors and the trustee will take place on April 13.