San Industries: mills sold, then bankruptcy to release a $1.8 million holdback

The San Group had been producing lumber since 1979, along a line that ran across British Columbia. Contractors harvested the timber, a sawmill in Port Alberni broke it down, remanufacturing plants turned it into finished product, and the group sold to builders and developers, individual consumers, and Indigenous groups and nations, with the United States as its primary export market. San Industries Ltd. owned the product from harvest to sale, and its subsidiary Coulson Manufacturing 2017 Ltd. ran the sawmill, which employed about 100 people, per the First Affidavit of Sukhjit Singh Sanghera, Nov. 27, 2024, paras. 4, 8, 10, 148. The plants in Port Alberni and Langley made siding, soffits, decking, fencing and cladding, per the First Report of the Monitor, Dec. 7, 2024, paras. 14, 18.

The affidavit that opened the case, sworn on November 27, 2024 by one of the group's three founders, gives the company's account of how the line stopped. Lumber prices had been falling since early 2022 while labour costs and interest rates climbed. In June 2023 a wildfire closed Highway 4, "the only highway that connects the island's two coasts," per the First Affidavit of Sukhjit Singh Sanghera, Nov. 27, 2024, para. 97. For most of that summer the group moved lumber out of Port Alberni over an old logging road at a fraction of its usual volume, and in July a 13-day port strike held its cargo. On April 7, 2024 the Acorn sawmill in Delta caught fire. The Province took the position that Coulson owed about $22,000,000 in stumpage and obtained two judgments against it, and on October 17, 2024 the group temporarily shut its Port Alberni sawmill and remanufacturing plant, per the First Affidavit of Sukhjit Singh Sanghera, Nov. 27, 2024, paras. 86–87, 93–108.

RBC made demand on October 25, 2024 and BDC on November 7, and between them the two banks were owed more than $150.0 million, per the First Report of the Monitor, Dec. 7, 2024, paras. 24–25, 41. On November 29, Justice Stephens of the Supreme Court of British Columbia granted an initial order for San Industries and 15 related companies, appointing Deloitte Restructuring Inc. as monitor, staying proceedings to December 9 and authorizing $600,000 of interim financing from RBC, per the First Report of the Monitor, Dec. 7, 2024, para. 2. "Current ownership and management intend to participate as a bidder in the SISP," the affidavit said, and the petitioners asked for expanded monitor powers "to implement the SISP and ensure an open and fair process," per the First Affidavit of Sukhjit Singh Sanghera, Nov. 27, 2024, para. 142.

By September 2, 2026, the mill, both plants and a farm had been sold, RBC and BDC had received $21.7 million on account of their security, and Deloitte was writing to creditors as licensed insolvency trustee of San Industries and Coulson, both assigned into bankruptcy on August 19, 2026. The trustee puts the lenders' shortfall at more than $129.0 million and does not expect any distribution to unsecured creditors of either company, per the Trustee's Preliminary Report (San Industries Ltd.), Sept. 2, 2026, paras. 6, 42–43 and the Trustee's Preliminary Report (Coulson), Sept. 2, 2026, paras. 6, 36–37.

The monitor takes the accounts

Deloitte had been RBC's financial adviser since February 2024. Eight days into the case, its first report set out a list of concerns: a write-down of about $20.0 million in log and lumber inventory at September 30, 2024, whose timing management had not clearly explained; about $6.0 million of logs that management reported swept from their booms outside the Coulson mill in a November storm; and a Bank of Nova Scotia account, opened in May 2024, into which about $11.7 million of receivables had been deposited, and which RBC advised was opened in breach of its credit facilities. On that record the monitor would not support the stay extension to January 10, 2025 that the petitioners sought, per the First Report of the Monitor, Dec. 7, 2024, paras. 31, 36–37, 50–52, 68–70. Its second report added that RBC would advance no further interim financing unless the monitor received further enhanced powers, which it described as including power to operate the business and sell the property in the petitioners' name, and ran the sale process itself, per the Second Report of the Monitor, Dec. 18, 2024, paras. 79, 83. The court granted those powers on December 19, 2024, per the Eleventh Report of the Monitor, Feb. 19, 2026, para. 4.

In January the monitor reported on the logs. Several parties with knowledge of log activity in the area had told it, variously, that they had seen no evidence of the logs, had not been told of any loss, or "did not believe Coulson would have had this quantum of logs at the time of the storm," and the monitor decided to spend no further time or resources on the matter, per the Third Report of the Monitor, Jan. 13, 2025, paras. 38–39. Management was terminated on or about January 31, 2025, per the Fourth Report of the Monitor, Feb. 3, 2025, para. 15. The monitor ceased all operations that day; when the case began, about 256 people had worked at the group's four sites, per the Fifth Report of the Monitor, Feb. 18, 2025, paras. 60, 68(b).

Sold in lots, priced under seal

The sale process approved on January 16, 2025 produced 29 signed confidentiality agreements from a list of 75 potential bidders. Letters of intent for the Langley plant and the neighbouring Langley farm were unsatisfactory against appraised values, in the monitor's view, so both went to Cushman & Wakefield ULC for listing. Three agreements followed, each filed with its price, deposit and allocation redacted, and the monitor's summary of the offers was sealed until closing. The Fraserview Cedar Partnership, a Surrey manufacturer since 1994, agreed to buy the Coulson mill and to offer the unionized employees work as successor employer under their collective agreement. A newly incorporated 1537037 B.C. Ltd. agreed to buy the San Forest Products plant in Port Alberni, to lease to IGV Housing Limited for prefabricated affordable housing, and Cedarline Industries Ltd., a Surrey maker of Western Red Cedar products, agreed to buy the Langley plant, its land and buildings from Axon Lumber Ltd. and its equipment from San Industries, per the Seventh Report of the Monitor, June 4, 2025, paras. 23–24, 34–36, 41, 47–48, 58, 60–61, 64, 72–73.

Justice Stephens approved all three on June 12, 2025, and the Coulson assets vested in 1534987 B.C. Ltd., a newly incorporated company related to the purchasers, per the Approval and Vesting Order (Coulson Mill), June 12, 2025, para. 5. Once the deals closed, the monitor reported the proceeds. Coulson closed June 20, bringing in $12,064,218 net of a $30,275 commission. The Langley plant closed July 15 and brought in $12,373,565, after commissions, $300,441 in tax and utility arrears and GST on the equipment. The San Forest plant closed on July 29, after three extensions to let the buyer finish its financing, with proceeds of $8,254,806 net of $1,319,994 in arrears, a commission and GST, plus $475,000 in extension fees; the remaining inventory netted $1,178,584, per the Ninth Report of the Monitor, Aug. 27, 2025, paras. 32–40.