Two Kitnuna companies declare bankruptcy

Business woes were no secret in Cambridge Bay

Employees of two of Kitnuna Corp.’s subsidiaries in Cambridge Bay, some of whom worked in this office, all received notice by last week that they were being laid off. This move took place in advance of the Nov. 4 declaration of bankruptcy by Kitnuna Petroleum Ltd. and Kitnuna Projects Inc. (Photo by Jane George)

By Jane George

Two of Kitnuna Corp.’s subsidiaries in Cambridge Bay have declared bankruptcy: Kitnuna Petroleum Ltd. and Kitnuna Projects Inc.

A sign posted on the Kitnuna Corp. building provided an official notice of the bankruptcies in the western Nunavut hub, where many of its roughly 1,800 residents already knew the Inuit-owned companies were in big trouble.

This sign posted on the Kitnuna Corp. building in Cambridge Bay is the official public notice that Kitnuna Petroleum Ltd. and Kitnuna Projects Inc. have declared bankruptcy. (Submitted photo)

All the companies’ employees had already been laid off.

But by filing for bankruptcy, the two Kitnuna companies can now stop unsecured creditors from taking legal action against them and stops any actions already in place.

Formally, this is called a “stay of proceedings,” and this protection is provided by section 69 of the Bankruptcy & Insolvency Act.

The two companies are subsidiaries of Kitnuna Corp., which is wholly owned by the Kitikmeot Inuit Association’s business arm, Kitikmeot Corp.

Christy Nipisha Sinclair, Kitikmeot Corp.’s director of business relations, confirmed today that Kitnuna Petroleum is no longer in business.

“Following years of being the sole provider of fuel to the community, which included storage, distribution and account management, Kitnuna Petroleum was unable to recover from the loss of revenue that resulted from the GN’s decision to assume this service in 2016,” Sinclair said in an email.

As for Kitnuna Projects, Sinclair said that “following years of reduced revenues and increasing costs, it could no longer generate the profits necessary to service its obligations to its suppliers, shareholder and creditors.”

The two companies made an assignment in bankruptcy on Nov. 4.

Kitnuna Expediting (known locally as Kitty Supplies) “is not affected by these closures and will remain open for business,” Sinclair said.

Online documents from Deloitte Restructuring Inc., which is acting as the licensed insolvency trustee, show that Kitnuna Petroleum has assets of about $9 million, but owes about $8.7 million, mainly to the Government of Nunavut and the Qulliq Power Corp.

Kitnuna Projects has about $2.8 million in assets and owes about $2.7 million, including roughly $120,000 to Kitnuna Corp., $73,000 to Kitnuna Expediting, $783,000 to Kitnuna Petroleum and $614,000 to the QEC.

Many western Nunavut companies are also on the list of creditors owed money by Kitnuna Projects: Inukshuk Enterprises, JMS Supplies, Kalvik Enterprises and the Ikaluktutiak Co-op, to mention a few.

Those who are owed money by either of the two companies will have to register with Deloitte so they can attend creditors meetings. The meetings are scheduled to take place on Nov. 25 at the Explorer Hotel in Yellowknife, at 1 p.m. for Kitnuna Products and 2 p.m. for Kitnuna Petroleum.

Kitnuna Corp. was originally a 50-50 joint venture between Nunasi Corp. and Kitikmeot businesses until Nunasi transferred its shares to Kitikmeot Corp. in 2015.

Then Kitikmeot Corp. became the sole owner of Kitnuna Corp., which managed a handful of subsidiary companies, including the two that have declared bankruptcy.

At the KIA’s annual general meeting last month in Cambridge Bay, no financials were presented for Kitikmeot Corp. or Kitnuna Corp., leaving beneficiaries in the dark about how much money may had been spent to keep Kitnuna afloat.

Kitikmeot Corp. president David Omilgoitok told the AGM that “in early 2017 we recognized that Kitnuna was struggling to address growing business challenges.”

“We made the decision to replace its management team and begin a restructuring effort that continues to this day,” he said. “Some of these restructuring decisions are now becoming apparent to the Cambridge Bay community, as certain unprofitable lines of businesses have been wound down.”

That’s all Omilgoitok said he could say.

Kitnuna Projects has been based in Cambridge Bay for the last 15 years and is one of the largest private employers in the Kitikmeot region, the Kitnuna Corp. website says.

“KPI is involved in all aspects of life in the North. General contracting, civil construction, vertical construction, concrete supply, residential repair,” it said.

Kitnuna Petroleum has “proudly served the community of Cambridge Bay since the 1960s,” the website said.

“By providing fuel to the residents of Cambridge Bay; KPL ensures that some of the hardship of living in remote, Northern communities is lessened. KPL also supplies fuel to the commercial airlines which provide regular service to Cambridge Bay and other isolated communities; as well as insuring dedicated medical transport planes are always fuelled and can leave at a moment’s notice.”

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(21) Comments:

  1. Posted by General Mills on

    Beneficiary owned businesses doing what beneficiary owned businesses do best: going out of business.

  2. Posted by Northern Inuit on

    so what will happen with the Upper and Lower Tank Farms? The dozen small (75,000) litre tanks they have toward the Water Lake? Who will pay for the remediation of these lands?

    The land around their Offices where all of their Heavy Equipment has been stored idle for all these years must be contaminate das well, years of dripping fuel and oil.

    This Company in the last years was so top heavy and paid huge amounts of money fly workers in and out of town, fed and housed them and not one dime of their salary was spent in town.

  3. Posted by Crony on

    This is exactly why I’m so wary of the Federal Government funneling money directly to Inuit Orgs and Dev Corps for infrastructure and programming.

    Frobuild, Sakku Pharmacy, Starbucks, Kitnuna, etc. etc.

    Someone is making a mint off these – profits are being privatized while losses are socialized.

    Look at the boards of the RIA’s – nary a Business Degree, an Accounting Degree, or any kind of post secondary education to be found. And they’re supposed to provide oversight of the Dev Corps?

    Until we start demanding transparency of our RIA’s and Dev Corps this will just keep happening.

    • Posted by Anonymoose on

      This is so very true.

      Our landclaims money is being laundered by white civil servants who are in power and in government offices and are transferring profit into the hands of themselves and their friends and the losses are being put into the hands of Inuit.

      • Posted by Waiting& Waiting (Kitikmeot ) on

        When are we going to receive the money that was promised
        to us Inuit people if we voted for Nunavut ?
        I guess our leaders forgot to give it to us.
        We should have demanded direct payment to each beneficiary,
        instead of the Regional Associations.
        Now our language is almost disappeared, along with our
        finances. Inuit in charge, OMG.
        A big mess created by our Inuit leaders, & other BS advisors.
        QUANNA

      • Posted by White Civil Servant on

        And what white civil servants are you talking about? I’m sure I’m not the only one who would like to hear who you are talking about?

    • Posted by Morally Bankrupt on

      Who needs an education in accounting and business? What a colonial attitude. All we need is Inuit Qaujimajatuqangit!

  4. Posted by Cap’n Crunch on

    It is fine; it is for the best. Allows for the private-Inuit-owned companies to grow even more.

    If possible the RIAs should not be creating companies when there is a perfectly fine Inuit-owned company that does the exact same thing.

    Sorry but if Kitnuna was owned by KC, they do not get to call themselves a “private employer”.

  5. Posted by Mark on

    Not surprising. Not ONE person in KIA or KC has ever run a for-profit business that I know of. EVER. Will any KIA or KC decision-makers be shown the door like the hard-working blue collar former employees of Kitnuna? And why is a KC employed employee working out of YK?? KIA & KC are sorry outfits.

    • Posted by Crystal Clarity on

      So true. Before the latest bumbling regime they had an employee in Alberta running the show who also knew nothing about running a business. These bankruptcies are a couple of decades in the making.

    • Posted by Northern Inuit on

      Will David Omilgoitok come talk about the “Restructuring Effort” now that it is public what everyone knew months ago?

      what has David Omilgoitok and John Stevenson done in the last couple years to prevent this?

      It is shameful how people who bled sweat and tears for Kitnuna for years upon years and for what? to be shown the street with nary a “catch ya later, best wishes”

      have any of the Employees been given options to work at Hope Bay? David, you were proud of them at the KIA AGM, but threw Kitnuna under the dog sled.

      classy.

  6. Posted by Nunavutmiut on

    KIA President and Board, what are you going to do about this? Nothing right?

    • Posted by Bill on

      Yes! what will KIA prez & board do about all of this?? Anyone going to get axed for allowing this to happen?? Oops! will have to wait til prez Stanley & pals return from another nlca-funded ‘trip’ to Yk/Ott/TO/Van/E-town/etc. A joke!!

  7. Posted by General Toe on

    It looks clear to me but no one is saying it. GN put those 2 out of business. Governments are enterprise are two different things.

    • Posted by Northern Inuit on

      Read the notice to creditors.

      It was the accounting of Kitnuna Corporation and parent company (in loose terms) Kitikmeot Corporation.

      They claim that Kitnuna Expediting has bad debt that will not be paid to Kitnuna Petroleum Ltd. in the amount of $502,258!!!! Must be nice to get free fuel right. Kitnuna Projects owes $783,000 as well.

      Now the payments to QEC are troubling. $641,000 that is owing. Damn.

  8. Posted by pissed off on

    I agree with the great majority of the people that issed opinions.

    However one question that has to be looked at is How can a company end up owing so muxh money to the GN and the Energy corporation ?

    You try that !!!

    You owe the energy corp for a few months and they will cut you off, ask you to post a sizable deposit to re-connect you and keep you on a tight rope.

    There has to be very strong political interference to allow this to continue until it is out of control. Again the taxpayers paying their dues will absorb the loss .

    Shame on the GN and the power Corp for allowing the sacred cows to screw the system

    Thank you

    • Posted by Nunavutmiut on

      You’re trying to blame the government!!! Bahahaha

  9. Posted by Harrol on

    Anonymoose these business may have gone into bankruptcy for any of the legitimate
    reasone. That have been identified by those who made reasonable comments. But please stop blaming white people. Your comment is something that is not needed when many employees . Lost their jobs thru no fault of their own.

  10. Posted by The Old Trapper on

    Hmm, Kitnuna Petroleum has $0.3 million more assets than debt, and Kitnuna Projects has $0.1 million more assets than debt, so technically neither is insolvent, at least not at this time.
    .
    I imagine that neither has any real business anymore so it would only be a matter of time. I can almost predict that the assets will not be worth their “book” value and that there will be more debt found.
    .
    At least it looks like it was close to a break even proposition, and the companies did provide jobs and wages for however long they operated. While not a success it doesn’t appear that these companies were a failure either.

  11. Posted by Disgusted on

    This is what happens when you allow outsiders, with no cultural ties, come in and take over a place with no supervision or accountability. Northern Inuit on 8 is correct, not only were huge sums of money spent on flying non Inuit employees in and out of camp without financial gain for in town purchases but that money was spent on employees who were no more qualified than the people of Cambridge Bay that were denied employment. One only has to look at the abundance of Canada Goose jackets that warm the backs of most of Nova Scotia in the last couple of years to understand Kitnuna’s financial state of disrepair. Instead of wages being spent locally they went towards provincial liquor stores which then supplied many white employees with the booze that was then smuggled into camp and used to procure sexual favors. I don’t know what will become of the tank farms but at least they will no longer be used by Kitnuna employees to take advantage of any more of our local youth. Regarding the equipment that sits dripping oil and contaminating the land, perhaps it should be sold back to the former management that misappropriated funds to purchase it from themselves in the first place because judging by the over inflated costs of purchasing this equipment, it must be worth it’s weight in gold.

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