Collecting Essar property taxes may cost city $175,000

City staff are optimistic they can collect $14 million owed by Essar Steel Algoma for 2014/15 property taxes.

But to make sure they're properly represented at the local steelmaker's Companies' Creditors Arrangement (CCAA) proceedings, they'll be asking for up to $175,000 at Monday's meeting of City Council.

The city has already retained the venerable Toronto law firm Aird and Berlis, LLP for this purpose, but City Treasurer Shelley Schell and Assistant City Solicitor Melanie Borowicz-Sibenik are warning that the current $50,000 spending limit may be exceeded and up to $175,000 will be needed.

"The City of Sault Ste. Marie is a priority lien holder and as such the city's claim will supercede most creditors," Schell and Borowicz-Sibenik say in a memorandum to Mayor Provenzano and councillors.

"It was nonetheless staff's opinion that due to the size of the city's claim and total debt owed by Essar Steel Algoma, it was in the city's best interests to retain expert advice to represent the city's interests at the CCAA proceedings and minimize the risk exposure to the city collecting on its claims."

Aird and Berlis was selected from a short list of five law firms that submitted letters of interest to the city.

"Each was evaluated based upon the staffing personnel offered, experience in a similar industry, whether the firm had a municipal law practice, potential conflict in representing other parties in the CCAA process and estimated costs," Schell and Borowicz-Sibenik said.

These are the three Aird and Berlis lawyers assigned to the Essar Steel Algoma file:

• Steven L. Graff, an Aird and Berlis partner since 1994 and a member of the firm's financial services and litigation groups. Graff is a restructuring and insolvency specialist who has represented Canadian Schedule I banks and other financial institutions on restructuring, security enforcement and recovery matters.

• Jeremy Nemers is an associate and member of the financial services group. He previously worked as an investment banker at a Montreal-based securities dealer and now practises insolvency law including restructurings, receiverships and liquidations, secured debt financing and distressed lending.

• Ian Aversa, a partner in Aird and Berlis's financial services group with expertise in litigation and commercial aspects of turnarounds, reorganizations, liquidations, security enforcement, receiverships and plans of arrangement under the Companies’ Creditors Arrangement Act.

Monday's City Council meeting will be livestreamed on LOCAL2.ca