Arctic Glacier whistleblower settles suit for $400,000

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This article was published 30/01/2017 (3259 days ago), so information in it may no longer be current.

The original whistleblower who ignited a meltdown in the fortunes of Winnipeg-based packaged-ice company Arctic Glacier Income Fund has settled a long and contentious civil suit for $400,000.

Martin McNulty, a former Arctic executive based in Michigan, settled with the receivers who are responsible for managing the assets of the fund under the Companies Creditors Arrangement Act. He had been seeking $14 million in damages.

The firm Alvarez & Marsal was appointed monitor of the fund — including its Canadian and U.S. subsidiaries — in February 2012 when the company was forced into creditor protection after it was in violation of debt covenants.

The business and assets of the company were acquired by HIG Capital in July 2012 for $434 million. HIG continues to operate the company as Arctic Glacier Inc. Officials from Arctic Glacier Inc. were unavailable for comment.

Alvarez & Marsal continue to manage the assets of the fund that remained as a result of the sale transaction through a court-monitored claims process.

The McNulty claim was the largest outstanding matter and with its resolution, a cash distribution to the fund unitholders might be in the offing.

Two years ago, the monitor released $54.5 million to unitholders. An official from Alvarez & Marsal said it was holding back $27.4 million to cover off the remaining potential liabilities.

Alvarez & Marsal officials were unavailable to comment last week, but when the distribution took place in January 2015, an official said he expected there would be another.

McNulty has alleged Arctic and others engaged in a conspiracy to prevent him from working in the industry and that he was offered bribes to prevent him from assisting the Department of Justice officials in their investigation, which began in 2007.

It has been reported McNulty was fired allegedly because he refused to participate in the antitrust conspiracy and he wore a wire on behalf of the FBI and taped a meeting with industry officials in Michigan.

That, ostensibly, was the basis of the wrongful-dismissal and civil suit.

Before the collusion allegations and investigation surfaced, Arctic had been on an impressive run of success, buying up small ice companies and distributing generous dividends to unitholders.

After that, the company’s fortunes started to decline. In 2009, Arctic Glacier International Inc., the former company’s St. Paul, Minn.-based subsidiary, agreed to a US$9-million fine for conspiracy to suppress and eliminate competition in the U.S.

Specifically, it agreed to plead guilty to one charge of engaging in a conspiracy to suppress and eliminate competition by allocating packaged-ice customers in the Detroit and southeastern Michigan region from the beginning of 2001 to at least July 17, 2007.

Under the terms of the settlement agreement announced last week, McNulty “releases and forever discharges and covenants not to sue” Arctic and will dismiss all proceedings against Arctic and its associated companies.

martin.cash@freepress.mb.ca