Creditors of Contac Services will not receive any repayment from the company that went into receivership with unsecured creditors owed $55.2 million, secured creditors $7.3 million for a total of over $62.5 million. The list of creditors is very very long and includes a number of travel agencies and other travel related businesses.
An observer called the meeting “another step in the process of the secured creditor taking over the business and assets of Contac and eliminating Contac’s liabilities including its name.”
Norrep Credit Opportunities Fund LP officially acquired Contac Services Inc. and all related assets. Norrep had been funding Contac and was the company’s largest creditor at over $32 million.
Best Buy is apparently suing former owner Riaz Pisani and another Contac Services employee for more than $3,000,000 related to gift cards which Contac allegedly collected the money for but kept instead of turning it over to Best Buy.
Contac’s Onewurld distribution business will be operated by Norrep-owned Go Direct Supply Chain Solutions Inc. Meanwhile, Norrep announced it will spin-off Mywurld Inc. and operate that company separately.
Contac Services was in operation for over 35 years, providing distribution and marketing fulfillment to various industries throughout North America. The company went into receivership in December.
Norrep was in a position to acquire Contac’s assets as it took security for the money it lent to Contac, while unsecured creditors effectively lent the company money without security.
The observer who attended the meeting reports that: “Unless something else comes out of the woodwork all that remains to be seen is whether the secured creditor, having eliminated all other existing liabilities, can make a go of these businesses.”