While facing $47.5 million in liabilities, Quest University is asking the courts to grant it financial protection under the Companies' Creditors Arrangement Act, according to court documents.
(Quest has since been granted the financial protection it requested. For the updated story, go here.)
A petition filed to the court on Jan. 16 is asking for a stay against all "all proceedings enforcement processes and remedies taken or might be taken against" the school.
Should the court grant the school its wish, this would allow the school to keep operating while it devises a way to restructure and settle with its creditors. Ideally, this would prevent the university from going into receivership or bankruptcy.
Among other things, the protection would grant the school the chance to conclude transactions that would allow it to make money off its land and pursue partnerships, among other things, the petition states.
Court records show Quest representatives appeared before the Vancouver courts on the morning of Jan. 16. The result of the hearing has not been posted as of press time.
In its claim, the school says payroll of about $295,000 is due on Feb. 10. This payroll has funds for that pay period but won't be able to pay for subsequent payrolls, unless it gets more financing.
"The petitioner will soon have insufficient cash to pay its operating liabilities as they come due," the claim says. "It currently has insufficient cash to pay the loans to the secured lenders."
Quest has experienced millions in "operating deficits and negative cash flows" for the fiscal years of 2016, 2017, 2018 and 2019, the document says.
The school says operating deficits over this period were anticipated, as enrolment ramps up.
Quest has about $86 million in assets as of May 2019, the document says.
Of the $47.5 million in liabilities, about $27.6 million is listed in the claim as secured liabilities.
"All of the indebtedness is due, but as at this date, only $23.4 million in secured debt has been demanded," reads the statement.
Secured debts occur when the borrower puts up an asset as surety for the loan.
This article originally appeared here.
