Lawyers for the Tlicho Investment Corporation will be in court this week to try to keep the creditors of its two trucking businesses at bay, long enough to sell off their assets.
Ventures West Transport LP and Tli Cho Landtran Transport Ltd. have been bleeding money for years, according to an affidavit filed in support of extending creditor protection for the two companies. The companies got creditor protection on Nov. 29.
"Since ... acquisition of the Transport Companies, the companies have recorded significant losses," said Mark Brajer in his affidavit. Brajer is CEO of the Tlicho Investment Corporation.
The corporation is run by the Tlicho government on behalf of the Tlicho people.
Brajer says Ventures West and Tli Cho LandTran have lost a total of $18.6 million in the last two years alone.
Over the years they've been propped up by loans from the corporation and other Tlicho companies to the tune of $37.6 million, according to Brajer's affidavit.
The Tlicho Investment Corporation increased its stake in the trucking business in recent years. In 2015 it increased its ownership of Ventures West from 60 per cent to 90 per cent. The following year it bought the 49 per cent of Tli Cho Landtran that it did not already own.
At the time of that last deal, then-president of the corporation Jasper Lamouelle said, "all benefits from the operation of Tli Cho Landtran Transport will now accrue to the Tlicho people and its shareholders and partners."
Nepotism, mismanagement alleged
The Tlicho Investment Corporation is currently being sued by one of its partners in those deals — the Denesoline Corp. of Lutsel K'e.
The lawsuit targets the Tlicho Investment Corporation and the two numbered Tlicho-owned companies that, in turn, own Ventures West and Tli Cho Landtran. Denesoline alleges that, since being purchased, Ventures West has been mismanaged.
"Our allegations included that friends and family of the chiefs were appointed to positions of authority with the numbered companies, and that such appointments resulted in gross mismanagement of the companies," Marco Poretti, one of the lawyers representing Denesoline, told CBC.
"What we see today, the numbered companies are in financial distress and court protection is being requested. So we do see a connection between our allegations and what has, in fact, come to pass."
The lawsuit was filed two and a half years ago. Poretti said the Tlicho have already paid some of what the Denesoline were claiming — $370,000 in unpaid dividends. The Lutsel K'e company also wants the Tlicho to buy out its share of the business. It is also calling for an investigation of how the companies were managed.
More losses ahead with lost contract
According to Tlicho Investment Corporation CEO Brajer's affidavit, though the mine fuel resupply was the biggest part of the trucking companies' business, it has not been profitable.
In an effort to turn it into a money-maker, the companies raised their rates in a bid they made earlier this year for the next five-year contract.
For the first time in 10 years, the Tlicho companies did not win the fuel resupply contract. In his affidavit, Brajer said, as a result, net losses for the coming year are predicted to be $9.3 million.
The corporation is now looking to sell off the assets of the two companies.
Composed mainly of trucks and trailers, they're valued at $40.26 million. Brayer said, as of Oct. 31, the companies had liabilities totalling $60 million, including the $37.6 million owed to the corporation.
The Tlicho Investment Corporation has undergone major changes in leadership over the years. Brajer has taken over from Lamouelle as CEO. Earlier this year, five of six directors were replaced.