The monitor in charge of winding up the creditor protection proceedings for the old Arctic Glacier Income Fund said a cash distribution to unitholders is in the cards.
In its latest report to the court filed earlier this month, the monitor detailed proposed settlement agreements on some potentially large claims -- including a $463-million class-action indirect-purchaser claim -- as well as change-of-control claims made by former senior management of Arctic.
In an interview, Richard Morawetz, managing director of Alvarez & Marsal Canada, said, "We are working very hard to get there and get it done. We are hopeful there will be a distribution in the near term."
The receiver has been granted a further stay of proceedings from the Canadian court until Feb. 7.
The indirect-purchaser claim settlement is for a maximum of $4.15 million, nowhere near the huge amounts the class-action lawyers were originally claiming. It still needs U.S. court approval.
The monitor has also granted more than $10 million in change-of-control claims made by eight former Arctic executives including former CEO Keith McMahon. Management contracts included change-of-control provisions that paid executives up to four times their salary plus bonuses.
In its report to the court, the monitor said, "While the compensation expert with whom the monitor consulted in respect of the management claims is of the view that the quantum of the change-of-control multiples are higher than would be typical for these types of claims in the current market environment, change-of-control payments to senior management are not uncommon."
The monitor also settled a disputed real estate holding in Arizona with Arctic Glacier founder and former chairman and CEO Robert Nagy.
There are at least two multimillion-dollar claims still in litigation and Morawetz said he could not anticipate when a distribution to unitholders would be possible.
"The bottom line is, based on court approvals (obtained so far) we are very pleased how things have developed," Morawetz said. "Based on the claims that have been settled and resolved and the various court approvals on the U.S. claims -- assuming that all happens -- we expect creditors will be paid in full and that there will be a distribution to unitholders."
Arctic's business was acquired by U.S. private-equity firm H.I.G. Capital in June 2012 for $434 million.
Although most of the units of the old income fund are now being held by various U.S. fund companies, the anticipation is there might be more than $70 million available for distribution, or about 21 cents per unit. Arctic units closed at 21.5 cents Monday on the CNSX.
Long-standing litigation with Martin McNulty, the original whistleblower from Michigan, whose co-operation with the FBI led to the antitrust investigation in the U.S. in 2008 into the packaged-ice industry, has yet to be resolved.
Arctic eventually pleaded guilty to some charges and agree to pay a $9-million fine.