Stiffed contractors left to watch and wait: unsecured creditors on the sidelines of Essar ownership battle.

• Author: Ross, Ian
• Position: CONSTRUCTION

For the many unsecured creditors owed millions in payment from Essar Steel Algoma, these are days of high anxiety for Sault Ste. Marie contractors and industrial suppliers.

Since the Sault steel producer entered creditor protection last November, and the steel works were subsequently put on the selling block, figuring out who'll be the new owner has become a far from certain process under the complicated, fluid and controversial Companies Creditors Arrangement Act (CCAA).

As months drift by and invoices go unpaid, the situation is casting considerable doubt on the future of some local businesses, admits Adam Pinder, executive director of the 155-member Sault Ste. Marie Construction Association.

"There's so much uncertainty that it makes for really scary times."

About 30 of the construction association's member companies are owed in the neighbourhood of $30 million, which is "significant money in Sault Ste. Marie," said Pinder.

Overall, creditors across North America are owed $1.6 billion by Essar Algoma, with $1.44 billion secured. The City of Sault Ste. Marie, a secured creditor, is owed $14 million.

"I think it's important to remember that there are a lot of local people that have sustained some significant losses and it's not looking promising that there's going to be anything for them to recover. It's going to hurt the Sault," said Pinder.

Since his members filed their claims last February with Ernst & Young, the court-appointed monitor, Pinder said it's been radio silence.

"We're on the short end of a long list."

The powerful United Steelworkers union and Local 2251 have a critical veto in the selection of a new owner, which likely played a factor in the recent withdrawal of KPS Capital Partners, but contractors remain standing on the sidelines, left to monitor court filings and read media reports.

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It doesn't leave Pinder overly optimistic that these shops will see any money based on what he's read in court documents or in any of the proposals from prospective bidders for Essar Steel.

"If there is money to come, it's not defined, so it's hard to say."

Pinder chose not to get into specifics on whether some companies are laying off employees, but with Essar being the city's main economic driver, and so much industrial work being spun off into many mechanical and fabrication shops, it's not hard to imagine their difficulties in a one-industry town.

"When any business sustains a loss they have do something," said...