PricewaterhouseCooper update on Area Finance and the numbered company

PricewaterhouseCooper estimates one cent per dollar of claim.

Total loan collections to Dec. 31, 2013 are:  Area Finance Inc. – $833,720 and 439288 BC   – $228,870  -total – $1,062,579.

Of the 654 loans, approximately 10 per cent have been settled and an additional seven per cent of borrowers have filed for bankruptcy and as a result we are unable to pursue collection.

In February 2010, Credit Recovery Centre (CRC), based in Prince George, B.C. was tired to collect the outstanding loans. The collection agreement with CRC has since ended and the estates have now hired Wolfco Bailiffs (“Wolfco”) to collect the outstanding loans.

Litigation with CRC

The issues with CRC stated long before the termination of its collection agreement with the estates. The collection agreement was structured such that CRC would receive 20 per cent for every dollar collected plus a success fee of an additional 10 per cent if, within 14 months from the date of the collection agreement of Feb. 11, 2010, CRC collected in excess of $3 million. CRC failed to meet the $3 million target and failed to remit the success fee that it withheld from the Estates.

On Nov. 11, 2011, the contract with CRC was terminated and a demand was made for the repayment of the improperly held success fee and the return of the books and records. Following the notice of termination, CRC commenced an action in the Supreme Court of British Columbia against PricewaterhouseCoopers (PWC), the inspectors personally and the estate’s legal counsel, Gowling Lafleur Henderson LLP claiming that the names parties had misrepresented the quality of the loan portfolio. The estates countered CRC’s action by initiating its own litigation against CRC for the return of the books and records and for a judgment of $67,000 for the return of the unearned success fee.

On March 16, 2012, the Court ordered CRC to return the books and records to PWC and, after a further application to obtain compliance with the order, CRC did so.

On July 27, 2012 the Court dismissed CRC’s action. An application for judgment against CRC is being prepared and will be filed before the summer 2013.

Defending against the CRC action has caused the Estate to incur additional legal expense and stalled the collection of the loan portfolio due to the failure of CRC to return the books and records in a timely manner. Wolfco appears to be making good progress considering the CRC had already pursued the borrowers for 2.5 years.

Real property

All 29 properties held by the Estates have been sold or the interest in those properties was released where it was determined that three was no equity for the Estates in those properties. Net proceeds of $454,913 have been received form the sale of real property after the deduction of prior ranking secured charges and sales commissions, but excluding legal fees.

Actions against related parties

A significant amount of the Estates’ efforts since our previous report have been focussed on actions to collect the debt owned by Mr. Glenn Anderson and Mr. Doug Montaldi.

The Estates have undertaken actions against other related parties that have resulted in settlements and judgments being obtained.

The inspectors (both current and former) have played a large told in the Estate’s recovery efforts against related parties and we wish to acknowledge their efforts. The inspectors are volunteers who have put in hundreds of hours assisting the Trustee in the administration of the Estates.

As we previously reported, Anderson filed for bankruptcy on Jan. 21, 2010 and Montaldi was petitioned into bankruptcy on May 31, 2010. Both Anderson and Montaldi continue to be undischarged bankrupts as the Estates have objected to their discharges.

We continue to work with the personal bankruptcy trustees of Anderson and Montaldi to identify assets and the best method of realization. A summary of actions related to Anderson and Montaldi follows:

Recovery actions relating to Anderson’s personal assets:

The Estates have assisted and funded Anderson’s trustee, John S. Beverly and Associates, to review and pursue certain matters against Anderson. This includes and action against Anderson’s son, Jarrett, in regard to Gerobeco Holdings Ltd. (Gerobeco), a company that Anderson was a shareholder at the time that he pledged all of his assists as security to the creditors of the Estates.

Anderson transferred all of his interest in Gerobeco to Jarrett. Jarrett has paid nothing for damages caused by Anderson transferring his interest in the Gerobeco shares.

Anderson’s trustee has applied for a Court order for Jarrett pay $537,887 plus interests and costs in respect of the assets transferred to him by Anderson for no consideration. The Court requested further submissions by Feb. 8, 2013. At the current time, we are undoable to estimate when a decisions may be rendered by the Court in this matter.

Recovery actions relating to Montaldi’s assets:

Montaldi has been examined three times under oath about his personal assets. The first examination was conducted by the Official Receiver, who is a representative of the Office of the Superintendent of Bankruptcy Canada. The second and third examinations were conducted by Gowling Lafleur Henderson LLP, who is legal counsel for the Estates and for Montaldi’s trustee, Boale, Wood & Company Ltd.

The Estate has taken action to recover funds from. Montaldi’s assets. These include the following: 1. Petitioning Montaldi into personal bankruptcy; 2. Judgment obtained against Marmon Financial Management Co. Ltd. (Marmon); 3. Appointment of a receiver of the cash and accounts receivable of Marmon; 4. Appointment of  receiver of Omineca Lama Ranch; 5. Judgment obtained against DVM Holdings Ltd; and 6. Judgment obtained against Houston Department Store Ltd.

To date, the Estate have funded these administrations approximately $52,500 and the collection efforts are still ongoing.


Marmon’s financial statements indicated that as of April 1, 2010, Marmon was indebted to Montaldi in the amount of $351,168. A notice of civil claim was field and subsequently a default judgment was obtained in respect of the amount claimed.

To date, approximately $35,000 has been garnished from Marmon’s bank accounts pursuant to that judgment.

While the Trustee’s application for default judgment was pending, Sharol Briere, the sole shareholder of Marmon and Montaldi’s former common in-law spouse, actively took steps to put Marmon’s assets beyond the reach of the Trustee by encumbering Marmon’s assets and diverting them to another company that Briere controlled.

The first of these transactions was discovered quickly as it was affected by a mortgage registered on title to Marmon’s lands. While default judgment was pending, Marmon granted a mortgage against its only lands in favour of a relative, Mr. Laurent Briere. The Trustee applied for and obtained an order of the Court declaring the mortgage void as a fraudulent preference or fraudulent conveyance. The mortgage was discharged from title. Its removal has allowed the Trustee to seek conduct of sale of the Marmon land and buildings. The Marmon office was sold to Intata Logging Ltd. for $130,000 on Nov. 15, 2012.

The second transaction was only discovered after the Trustee examined Montaldi in aid of execution on its judgement, during which Montaldi confirmed that Marmon has been depositing monies payable to it into an account in the name of Graywood Energy Ltd., a company controlled solely by Sharol Briere. The Trustee applied for and obtained a further order setting aside those transactions and appointing a receive of Marmon’s cash and accounts receivables. The Trustee will be applying for further relief in regard to monies diverted from Marmon.

DVM Holdings Ltd. (DVM)

The Trustee obtained judgment against DVM for $53,860 in regard to a shareholder loan owned by DVM to Mr. Montaldi.

Houston Department Store Ltd. (HDS)

The Trustee obtained judgment against HDS for $370,075 in regard to a shareholder loan owned by HDS to Montaldi.

The judgment has been registered on title to the lands owned by HDS. All of those lands were subject to prior ranking mortgages, the holders of which have each commenced foreclosure proceedings.

In the proceedings initiated by the Bulkley Valley Credit Union, the Trustee has applied for and received an order granting it conduct of sale of the two lands that are the subject of that foreclosure proceeding. It is unclear if there will be any equity in the properties for the Estate after mortgage in favour of the Bulkley Valley Credit Union is repaid.

Trustee’s statement of receipts and disbursements

A statement of receipts and disbursements for the estates for the period Nov. 2, 2009 to Jan. 21, 2013, currently, cash on hand totals $189,014.34 for both Estates.

Future actions

The last PWC report indicated that we would aim to complete the administration of the Estates by the end of 2011. As the collection of the loan portfolio and certain legal actions remain in progress, it is likely that the administration of the Estates will continue into the latter part 2013. key tasks remaining in the administration of the Estates include:

– Realization of the loan portfolio by Wolfco; – Finalization of the administrations of bankruptcy estates of Montaldi and Anderson – Finalization of the receivership of Omineca Lama Ranch;

– Resolution of legal action with CRC and other related parties;

– Finalization of a number of legal matters related to the accounts receivable of the Estates; and

– Distribution of surplus funds to creditors.

PricewaterhouseCooper estimate that the dividend to creditors will be approximately one cent per dollar of claim. PWC does not anticipate making a distribution to creditors until all of the above matters are finalized.

Periodic updates regarding the file and the payment of a dividend will be communicated on the Trustee’s website:

Should creditors require further information or have any questions, please contact Ms. Kiran Chahal (telephone: 604-806-7787 or email: