Nunatsiaq News
NEWS: Nunavut April 11, 2014 - 7:04 am

Anglican diocese to pay Dowland receivers $2.65 million on Nunavut cathedral debt

It's unclear where money will come from or how it will affect the church

David Parsons (left), the Anglican Bishop of the Arctic and Darren McCartney, the Suffragan Bishop of the Arctic, made a public appeal for help Oct. 7 when it became apparent that the Dowland receivers would come knocking. (FILE PHOTO)
David Parsons (left), the Anglican Bishop of the Arctic and Darren McCartney, the Suffragan Bishop of the Arctic, made a public appeal for help Oct. 7 when it became apparent that the Dowland receivers would come knocking. (FILE PHOTO)

The Anglican Diocese of the Arctic has offered to pay $2.65 million to Alvarez and Marsal Canada Inc., receivers for the now defunct Dowland group of companies, for the bulk of a debt owed from the rebuilding of St. Jude’s Cathedral in Iqaluit.

That amount is basically what the church owed Dowland Contracting Ltd. when the company, and several other Dowland enterprises, became insolvent and went into receivership in May 2013.

According to a report issued by the receiver March 10, 2014, the church’s offer, made in a Feb. 14 letter by David Parsons, Bishop of the Arctic, was accepted, but is still subject to approval by the Court of Queen’s Bench of Alberta.

The report said the case was expected to be heard March 18, but it’s not clear if any hearing of the matter occurred on that date.

When contacted April 10, Parsons said that he has been involved in settlement negotiations, but had not heard whether the deal had been finalized and was therefore unable to comment on it.

Both lawyers, representing the church and the receiver, were out of town and unavailable to comment immediately.

According to the deal, the diocese has 90 days to pay the $2.65 million, but it’s unclear where that money will come from or whether it will affect the church’s social ministry in Iqaluit which includes a thrift shop, the building that houses the local food bank, and the soup kitchen.

At the time of the new cathedral’s construction, following an arson fire in 2005 that gutted the original building, Dowland was involved in a joint-venture with NCC Investment Group in an entity called NCC-Dowland Construction Ltd.

But it was Dowland alone who was responsible for finishing construction contracts and any money coming into NCC-Dowland would go to Dowland Contracting, minus “participation fees” that NCC retained.

The new cathedral cost about $8 million to build. Through insurance and fundraising, the diocese was able to pull together about $5.5 million which left them $2.5 million short.

NCC-Dowland agreed to finish construction despite the shortfall, while fundraising efforts continued.

According to the receiver’s report, in April 2013, just before Dowland went under, the Royal Bank of Canada entered into a “forbearance agreement” with Dowland Contracting Ltd.

The report does not offer details of this agreement but generally speaking, a forbearance agreement is when a bank allows a debtor to delay making payments on a debt.

The bank then took possession of a promissory note signed in June 2011 between Dowland and the Anglican Church which outlined how much the church owed Dowland at the time: approximately $3.94 million.

Taking possession of that note meant that the money the Anglican Church owed to Dowland is now owed to RBC.

In September 2013, four months after Dowland went into receivership, discussions began between the receiver and the diocese in an effort to reach a settlement.

In consultation with RBC, a settlement was reached whereby the $3.1 million that the church still owed would be whittled down to $2.65 million. Payment would constitute a full and final deal and any liens the bank had on diocese properties and assets would disappear.

The receiver agreed to the reduced amount for a number of reasons. Fighting for the money would mean more time and legal fees, for one.

But they also considered, “the potential impact and disruption of the receiver initiating enforcement proceedings on certain community and charitable services (such as meal/food kitchens and other such activities) conducted from the St. Jude’s Cathedral in Iqaluit,” the report said.

The financial collapse of Dowland Contracting Ltd. and related businesses left a trail of creditors across Canada and Nunavut including the Government of Nunavut which had contracted Dowland to renovate the old Baffin Regional Hospital in Iqaluit.

Other Nunavut creditors include Nuna Logistics Ltd., owed $9.4 million, Kitnuna Corp in Cambridge Bay, owed $231,004, and KRT Electrical, Iqaluit, owed $224,451.

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