The president of Entegrity Wind Systems is breathing a sigh of relief after the Supreme Court of Prince Edward Island denied a Toronto bank's request to force the company into bankruptcy.
Despite the obstacles, Jim Heath says his company can dig itself out of the financial trouble it is now in. He said orders continue to come in and people are interested in their product.
Entegrity builds small wind turbines.
Supreme Court Justice Benjamin Taylor dismissed Mercantile Finance's request to name a court-appointed receiver and awarded Entegrity $5,000 in damages.
But Entegrity's legal battles are far from over.
The company, with offices in Charlottetown, was back before the courts on Friday asking for a 45-day extension to come up with a plan to get itself out of debt.
Mercantile, the Toronto-based bank, is opposed to that extension.
Justice Wayne Cheverie has yet to rule on the extension.
"If it had been against us, the company would have been gone, at least in my opinion. I was prepared for the worst," said Heath, who is based in Santa Fe, New Mexico.
"It has been a very, very damaging set of events for the company."
Entegrity ran into financial problems this spring and sent its employees home in June.
Court documents say it owes more than $11 million, including $3 million to its bank, $370,000 to P.E.I. taxpayers through P.E.I. Business Development Inc., and another $8 million to unsecured creditors, including employees and suppliers.
Employees have not been paid since mid-May.
But Entegrity disputes those figures, saying its unsecured debt is not as high as $8 million.
Mercantile argued that Entegrity consented to the appointment of a receiver. It even had a document signed by Malcolm Lodge, a P.E.I. shareholder in the company.
But Taylor, in his court decision, ruled that Entegrity did not give that consent.
That's because Lodge is no longer president, CEO and majority shareholder.
Heath now holds those titles.
Taylor writes, in his nine-page decision: "It is plain to me Mr. Lodge's prior authority had changed completely, he no longer held the authority he once did, Mercantile knew it, yet sought a consent from Mr. Lodge because Mercantile knew it could not get consent from Mr. Heath."
Taylor goes on to say: "Mercantile says it lost faith and trust in Mr. Heath … (Heath) is still the president, CEO, and majority shareholder and Mercantile could not reasonably court and cajole consent from a single director owning 11 per cent of the shares to put the company into private receivership."
Kevin Kiley, the lawyer for Mercantile, said his client would have no comment on the ruling.
Heath, meanwhile, said nothing more can be done until Justice Cheverie rules on his request for a 45 day extension to get his company's fiscal house in order.
If the request is denied, Entegrity will be deemed bankrupt.
If they get the extension, the difficult task to rebuild the company will begin.
"There has been pretty severe damage to our reputation," Heath said.
"We've lost many deals because people didn't want to deal with a company in the state they thought we were in, or was represented we were in."
If Entegrity survives, its future will include a P.E.I. presence but it may not include Lodge.
Heath refused to discuss what, if any role Lodge, a man considered a pioneer in wind development in P.E.I., may have with his company.
But Heath said he would maintain his production facilities on Belmont Street in Charlottetown and he says it is his intention to pay all his P.E.I. staff including back pay. He said while the P.E.I. government has been supportive, his restructuring plans do not include more money from Island taxpayers.
"We have some excellent people there, and we have people with excellent experience, who know the equipment very well," said Heath.
"It would only make sense for us to continue activity there."
Who's who at Entegrity:
Who's who at Entegrity
The following is a list of officers at Entegrity Wind Systems, according to the P.E.I. government's corporate registry:
- Malcolm Lodge of Charlottetown, chief technical officer;
- James A. Heath of Santa Fe, New Mexico, CEO and president;
- Maurice Miller of San Francisco, Calif., treasurer/secretary;
- Derek Burns of Charlottetown, assistant controller;
- Peter Wilson of LaSalle, Quebec;
- Matt Lowry of Boulder , Colorado;
- Various other unnamed shareholders.
On Wednesday: What went wrong at Entegrity? Hear from Jim Heath in The Guardian on Wednesday.
