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Elementa Group placed in receivership, police involved

Once the darling of Sault Ste. Marie's plans for alternative-energy dominance, Elementa Group has been ordered into receivership with more than $10 million in debts. "EGI [Elementa Group Inc.

Once the darling of Sault Ste. Marie's plans for alternative-energy dominance, Elementa Group has been ordered into receivership with more than $10 million in debts.

"EGI [Elementa Group Inc.] is not an operating business, has no current paid employees, has no ongoing revenue-generating operations, and has no realistic prospect of satisfying its debts," say the company's former lawyers, Bennett Jones LLP of Toronto. 

Bennett Jones is owed $2.9 million by Elementa for legal work, much of it done or overseen by partners Eden Oliver and Claire Kennedy, who billed $800 an hour when first retained by Elementa in 2012.

"Bennett Jones has lost confidence in EGI and believes there is no reasonable prospect of payment," says Oliver in a sworn affidavit filed with the Ontario Superior Court of Justice.

Oliver's affidavit also claims that the law firm has received information about a "pattern of troubling and dysfunctional dealings," including filing of police reports regarding allegations of:

  • $26,000 of company funds missing
  • unauthorized withdrawals
  • removal of blank cheques
  • writing of an unauthorized cheque
  • various physical altercations

The legitimacy of a recent special shareholders meeting has also been questioned, bringing into dispute the control of EGI and its property, including a 15-acre site at 903 Base Line Road where the company planned to build its long-awaited waste-to-energy commercial plant.

In addition, concern was expressed that some directors were being denied access to corporate files, including details of spending at Bennett Jones.

Elementa Group is an early-stage tech development company that owns a patented steam reformation process for turning carbonaceous municipal waste into synthesis gas.

Bennett Jones, a secured creditor, became concerned "about the erosion of its security interest and the preservation of the property."

None of the allegations have been tested in a court of law, but Justice Glenn Hainey agreed last week in Toronto to seize all of EGI's assets, undertakings and properties, turning them over to an accounting firm that will act as receiver under the federal Bankrupcty and Insolvency Act.

The news marks a considerable fall for Elementa Group from 2008, when an excited City Council granted Elementa's predecessor corporation, enQuest Power, six months to prove the viability of a pilot plant.

"Sault Ste. Marie will be at the forefront of this province, if not the country, on this particular endeavour," crowed Ward 1 Councillor Steve Butland.

"If we could even divert even a third of our waste..." added then-Mayor John Rowswell, "...there is a major payback to the community in that we won't have to find an additional $100 million to build a new landfill for many years."

"There is no risk to us. If this works we all win," the mayor said.

enQuest/Elementa operated a successful pilot plant at the Sault Ste. Marie municipal landfill from 2007 until 2011.

In January of 2014, Sault MPP David Orazietti announced a 20-year agreement between Elementa and the Ontario Power Authority, using a full-scale commercial plant to add 9.5 megawatts of electricity to the provincial power grid, enough to generate power for 10,000 homes.

“Elementa’s new waste-to-energy project will further diversify our local economy and strengthen Sault Ste. Marie’s position as a leader in the renewable energy sector,” Orazietti said.

The new plant was expected to create as many as 30 full-time positions and more than 100 construction jobs.

In October 2014, Elementa closed a deal with the City of Sault Ste. Marie, acquiring the Base Line Road property, immediately adjacent to Flakeboard’s melamine lamination plant.
 
The lot is serviced by a cul-de-sac, Wood Park Court.

But Elementa needed to raise $50-$55 million to build its commercial plant.

That never happened.

Despite numerous deadline extensions from City Council, construction never began on the Second Line site.

In his order last week, Justice Hainey granted the receiver authority to change locks and security codes to safeguard company property, and to negotiate the sale of Elementa assets, which include Canadian and U.S. patents as well as a trademark on the Elementa brand.

The judge also ordered Elementa to co-operate with the receiver, providing access to corporate records and physical facilities.

(PHOTO: A sign for the proposed site of the Elementa plant seen October 8, 2014 near Base Line Road. Kenneth Armstrong/SooToday)


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David Helwig

About the Author: David Helwig

David Helwig's journalism career spans seven decades beginning in the 1960s. His work has been recognized with national and international awards.
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