MEC Sale Approved – Members and Co-op Organizations Consider Further Court Challenge
VANCOUVER (NEWS 1130) — Hundreds of Mountain Equipment Co-op members are working to salvage what’s left of their beloved co-operative and planning next steps at a town hall meeting Monday night.
Meanwhile, co-operative sector groups, such as Co-operatives and Mutuals Canada haven’t ruled out a legal challenge of the BC Supreme Court’s decision.
Last week, the courts approved the sale of MEC’s assets to Kingswood Capital Management, a U.S. company, which sent a tidal wave through the co-op sector in Canada, according to Andre Beaudry, executive director of CMC.
“It hits at the roots of the sector because the B.C. Co-operative Association Act, and the rules of Mountain Equipment Co-op were not respected in the process of sale of MEC’s assets and that is of grave concern,” he says.
Beaudry estimates 200,000 people work at 8,000 Canadian co-ops, accounting for 3.4 per cent of GDP.
“Co-ops in Canada are larger than the telecommunications sector, the mining sector and the auto manufacturing sector, but they can’t be taken for granted,” warns Beaudry who worries co-op legislation has been undermined.
The groups are waiting for the judge’s written decision to be available before deciding whether to appeal, but whatever happens next there are major questions about the need to bolster provincial co-op legislation in the wake of what many consider to be a tragic fleecing of a beloved Canadian company.
Andrea Harris, executive director of the BC Co-operative Association believes “the co-op model may not have been fully appreciated within the court and says We definitely want to explore the opportunities to make sure that that doesn’t happen in the future.”
“I think there’s a bit of a silver lining in that people are coming away from this going, you know, ‘we can’t let this happen to co-ops in the future’ and ‘how do we make sure that we have the appropriate governance in place to protect confidence and to protect members and to engage members?’” she says.
Both Beaudry and Harris believe the court’s decision has sent a ripple of concern throughout the co-op sector and believe the provincial government has an obligation to work to strengthen and clarify co-operative law.
“The Act requires co-ops in B.C. to seek special resolutions from their members prior to engaging in the sale of substantially or all of the association’s assets, or at least to have consultative meetings with members to determine their level of support,” says Beaudry.
Members continue to mobilize
After the sale of assets was announced in September, a core group of members quickly combined efforts: MEC Members for a Democratic Future combined with the newly formed Save MEC to create a unified front.
The group raised money to hire a legal team to attempt to have the sale held off for a few weeks while the co-ops membership explored further financing and creative solutions to address MEC’s growing debt but were unsuccessful.
After a weekend in mourning, the steering committee will do what the board failed to do and will sit down with engaged members who want to see Mountain Equipment Co-op live another day.
About 400 members are signed up to attend a virtual town hall to gather thoughts and debrief before making decisions about the fate of the co-op, starting at 5pm, October 5.
“A lot of people are upset at losing MEC,” says Elliot Hegel, who worked as frontline staff at the Ottawa store before joining the Save MEC steering committee.
“It wasn’t serving to line the pocket of some major shareholder in the company, we all owned it together,” he says.
“We recognize as a steering committee of Save MEC that it’s not just us. Save MEC is something that’s everyone’s,” he says.
There are calls to form an entirely new co-op, to fight to retain rights to the existing membership and co-operative status separate from the assets, and even hopes that a legal appeal could be mounted to challenge Thursday’s decision.
If a new co-op is to form, many are saying they want to see a return to outdoor, self-propelled sports and a renewed commitment to social and environmental principles that helped make MEC one of Canada’s most trusted brands.
Meanwhile, former board candidates who were never allowed to see the results of this year’s election, continue to question why MEC’s annual election that was delayed amid the pandemic and financial troubles, seemingly as MEC’s board plotted a quiet sale of its assets.
“This is a warning to members of all co-ops … It calls into question all co-ops and all organizations that have a similar set up where members or stakeholders are not given an opportunity to have a say in the future,” says one board candidate who has asked to remain anonymous fearing blowback from the sitting board.
“There were lots of opportunities where the candidates and members could have been informed about what was happening and it seems like there were some nefarious reasons as to why things were left,” the former board candidate adds.
Instead of dwelling on what might have been, candidate Lyse Le Gal, who managed to make it on the ballot as a board recommended candidate in this year’s election, is looking at the future.
Le Gal says she sees a bright light in young leaders who’ve taken the charge with Save MEC and believes there’s a chance the spirit of the co-op may live on yet.
“It’s one for all and all for one, it’s quite simple. Everyone has the same vote. Everyone has the same importance,” she says of cooperative values, adding she only ran in this year’s election to try to change things from the inside out as MEC had been drifting away from its original mandate for some time.
Le Gal says she would be happy to see a new co-operative formed and will be ready to help if needed.
While many questions remain unanswered, and many will persist even after the written decision from the BC Supreme Court ruling is made available, some members are calling for accountability, accusing the board of failing to meet its duties to the membership.
MEC did not engage with members before the sale of assets and actively denied it was seeking credit protection when NEWS 1130 asked management and the board that question in May, 2020.
“This is false information,’” MEC’s third party communications company claimed via email at the time
According to a timeline revealed by documents filed with the CCAA monitor, MEC was seeking refinancing options in March after COVID shutdowns worsened its financial situation. By June 3, 2020 the company had entered into the “sales and investment solicitation process” and was seeking a buyer.
MEC’s board suddenly delayed the results of the election moments before candidate appointed election scrutineers were scheduled to arrive to supervise a vote count and a potential shift in power on the board.
The results of the 2020 election were never revealed and the annual general meeting was to be postponed until December.
“One of the things we really want to do with this town hall is show MEC’s board how engagement should be done,” says Hegel, who is happy at least that Kingswood Capital Management will not be able to purchase the name “Mountain Equipment Co-op.”