New information on Leon Manufacturing and Ram Industries is providing an update on the status of the Yorkton, Sask.-based companies since going into receivership in June.
Since first reporting, on July 3 in “Leon Mfg. Co. & Ram Industries Enter Receivership,” on the financial troubles which resulted in Leon Manufacturing Co. and Ram Industries going into receivership, a summary of highlights in Ernst & Young’s initial report outlines important actions taken. A news item published Oct. 30 by The Western Producer, which reviewed the receiver report, stated that a Nov. 8 court date has been set to approve a superior offer for Leon equipment, and identified a proposal from Joiner Sales Corp. as the superior offer. Joiner said it would conduct a public online auction.
As the appointed receiver for the case, the Ernst & Young has been attempting to sell assets and the buildings of both businesses. In issuing its first report last month, the receiver noted allegations of false invoices and little evidence of manufacturing taking place, according to industry reporting.
What follows is a summary of the report’s findings:
Leon owed BMO more than $13 million and Ram owed more than $3.5 million, as of June 4, 2023. Additionally, Eighty-two employees received Wage Earner Protection Program packages, the report said. The companies owed more than $700,000 in property taxes to the city.
After a walk-through was conducted once the receiver took possession of the property on June 11, the report stated the receiver “noticed that the raw materials and work-in-progress appeared minimal to non-existent at both locations.” After talking to management, the receiver decided to immediately close Leon while allowing Ram to continue operating with minimal staff to complete outstanding projects.
Management did not supply large outstanding balances for insurance premiums that were owed when requested, leaving the receiver to compile a list from the companies’ servers and previous reports. According to the report, “Upon receipt of the initial demand letters, many customers contacted the receiver disputing amounts outstanding and providing detailed information about orders not being fulfilled by the companies, equipment not being shipped and amounts invoiced being incorrect.”
The news summary published by The Western Producer noted that equipment dealers also had difficulty getting products from the companies, adding that the report also noted several customers filed complaints with local authorities to try to get their money back for equipment that was paid for but not delivered or for refunds they had been told were sent but never received. This included contacting the Royal Canadian Mounted Police (RCMP). Ernst & Young continues to investigate other allegations, and is reviewing the status of a supposed $2 million investment account which it notes may have been liquidated earlier.
Updates on Offers
Offers to purchase the Leon assets were due July 31. While the offers are confidential, the report did find that there were 13 from 10 parties to buy the equipment, remaining raw material, works in progress and intellectual property. The report also stated that there were no satisfactory offers for the buildings, and they are listed with a commercial realtor for $5.5 million.
In late September, Ernst & Young issued a request for offers and proposals for the Ram equipment and tool assets. They were due Oct. 25. The real estate for both businesses for sale are on the receiver website.
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