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MEC members unite in legal battle to save the Co-op

RBC is arguing in favour of the sell-off, while members ask for a chance to save their Co-op

by David Gray-Donald

MEC members unite in legal battle to save the Co-op

Members of Mountain Equipment Co-op (MEC), along with other cooperative organizations, are in court in BC making the case that there are alternatives to MEC selling its assets through a bankruptcy proceeding, and that the sale to American investment company Kingswood Capital Management should be denied or at least paused. 

As per a statement made late Tuesday, Sept 29th, by SaveMEC member and spokesperson Kevin Harding, the court proceedings are ongoing and no decision has yet been made. They will be back in court this afternoon, Sept 30th, and so far have fundraised over $100 thousand to cover legal costs.

“We are serious about providing viable alternatives to the Kingswood deal, and are asking for time to pull it all together,” says Harding in the statement. “So much work is already underway, we have received offers of over $100 million in financing, loans, and investment... and we expect to get more. But none of this will mean anything if we don't secure the time we need.”

The sale to Kingswood is for around $150 million, according to court documents.

Earlier in September it was announced that the MEC management and board of directors had reached an agreement with Kingswood Capital to sell the company without approval from its over five million members. MEC was founded in 1971 in Vancouver as a way to buy quality outdoor gear at lower prices, and has grown, at times, into a vibrant community and important force in the retail and co-op scenes in Canada. The mechanism MEC leadership is trying to use, which may avoids the need to consult members, is bankruptcy. Bankruptcy law favours creditors, those who have loaned the company money. In recent years, MEC made some mostly-unsuccessful attempts to expand its number of locations and its product line into lower-quality items and items beyond its core offering of quality outdoor gear.

Among the creditors are major Canadian banks RBC, TD, and CIBC. In court, RBC has been arguing in favour of the Kingswood deal, reportedly saying other hypothetical arrangements are unlikely to materialize, and they want their money. 

You can continue to put pressure on RBC,” writes Harding. “Tell them that the SaveMEC plan includes paying them their fair share, all we need is for them to extend their loan for just a few weeks to give us a fair chance to keep our Co-op.”

We will be following this story. SaveMEC updates are often posted in the Facebook group.

Disclosure: the author is a MEC member

 


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