Debates of March 24, 2004 (day 7)

Thank you, Mr. Speaker. With regard to my Member’s statement, I would like to ask the Minister responsible for the Business Credit Corporation a question for the benefit of my constituents who received legal notices that their loans have been called. What steps are followed after being given these notices that the BCC is calling in their loans? I am interested in the process that is followed after being legally contacted. Thank you.

Minister of RWED, Mr. Bell.

Return To Question 74-15(3): Business Credit Corporation Loans Arrears

Thank you, Mr. Speaker. I will have to get the Member more specific detail as to the steps that follow our contact with a client, and notification that we are pursuing legal means. I would say legal means are a last resort, we are not trying to be overly litigious. We work very closely with clients to try to help them through rough spots. I know the BCC makes every effort to look at temporarily allowing interest-free payments and withholding the requirement that interest be paid. There are even times when a stop payment is made on principal if businesses are in a truly difficult position. So we try to work with the clients and recognize the difficulty that they're in before we move to legal means. Thank you.

Supplementary, Mr. Menicoche.

Supplementary To Question 74-15(3): Business Credit Corporation Loans Arrears

Thank you, Mr. Speaker. Just for clarification from the Minister, is it necessary that some of the arrangements were so that the term loans become flexible of waiving interest and deferring principal payments? When it's noticed that the business is in trouble, do they try to then look at these different alternatives for the BCC, as opposed to these letters from the lawyers to call in their loans? Thank you.

Minister of Resources, Wildlife and Economic Development, Mr. Bell.

Further Return To Question 74-15(3): Business Credit Corporation Loans Arrears

Yes, Mr. Speaker, to the Member's question, it is true. We try to do everything that we can to make sure we continue to support the business. Our goal is not to put people out of business, our goal is not to push these things into the legal process. I think it's important to remember though that the onus is on the client to ensure that there is an ongoing dialogue with our department. If the dialogue breaks down, then we really have no choice but to try to get the money back. These are public tax dollars. But I would say we leave almost no stone unturned before we move to legal recourse. Thank you.

Supplementary, Mr. Menicoche.

Supplementary To Question 74-15(3): Business Credit Corporation Loans Arrears

Thank you, Mr. Speaker. I thank the Minister for those answers. I am sure we, as a government, are indeed looking out for our small businesses. The next question is when someone is utilizing our credit facilities, like the BCC or the NWT Development Corporation, they are, of course, not thinking that they will get into trouble or find themselves in situations where they are unable to pay any loans. I'm just wondering if there's any type of counselling available or advice given to the clients beforehand that if you are in trouble, these are the steps that are going to take place and this is what we'll be looking for as a solution to any problems that we have. Thank you.

Minister of Resources, Wildlife and Economic Development, Mr. Bell.

Further Return To Question 74-15(3): Business Credit Corporation Loans Arrears

Thank you, Mr. Speaker. We look at these on a case-by-case basis, and there is individual case management. I think that that's something important to remember. We recognize that the BCC is a lender of last resort. As such, it takes on loans of higher risk; loans that typically banks are not interested in. In some of our smallest communities where banks won't go, it is the only lender. We acknowledge that there's additional risk, but we don't go into these loans and don't go into working with clients assuming or thinking that the businesses won't work out or that they'll fail. We go in and expect to see the best efforts of all parties, and we make every effort to work with the clients and counsel them where necessary.

I know that our economic development officers in the communities do have discussions and lay out options for recovery plans. Sometimes businesses do go sideways through no fault of the loan applicant or the proprietor. Things can happen. At that point, when we sit down to talk about recovery plans, we lay out all the options for clients and we look at wind-up scenarios. Sometimes they include things like bankruptcy, but I think the point is that we don't get into these loans assuming that they won't work. We wouldn't lend money if we thought the business was going to fail. We know and acknowledge that there is risk and do try to work with the clients, but I think that you'll find that the BCC does a very good job in working in the communities to make sure people recognize all the options before them. We're not trying to push them into any of these options. I think what's best for the client is important and we'll work with them on that basis. Thank you.