MEC sale to proceed after B.C. judge denies attempt to have it paused

The sale of Mountain Equipment Co-op will go ahead afterB.C. Supreme Court Justice Shelley Fitzpatrick approved the sale and dismissed an application by members to have it delayed.

"We've known from the beginning that this was a bit of an uphillclimb,'' said Kevin Harding, national spokesman forthe Save MEC campaign.

"The laws that are around the [creditorprotection]process don't recognize co-ops or members as being important in the slightest, so the odds were stacked against us.''

Save MECwas trying toprevent the sale of the beleagueredoutdoor recreation retailer to U.S. private investment firmKingswood Capital Management. Apetition launched by the group had garnerednearly 145,000 signatures by Friday.

The legal challenge was mounted in collaboration with theB.C. Co-op Association,Alberta Community and Co-operative AssociationandCo-operatives and Mutuals Canada, "to protect the integrity of the co-op model and to put member rights at the forefront of the transaction."

The group had asked the court to give it time to come up with a counter proposal to address MEC's liquidity issues,including selling real estate, obtaining operating loans and bringing in a credit card rewards program.

But in a response filed earlier this week, the company doubted the group's ability to address MEC's cash flow issues, noting that the proposed sources of potential funding don't involve "concrete commitments or realistic options.''

AndrBeaudry, Director General of Co-operatives and Mutuals Canada,says today's ruling could openup a Pandora's box of legal concerns.

"For 49 years MEC was a co-operative. In the B.C. Co-opAssociation's legislation... and in MEC's own bylaws it was very clear that members needed to be consulted before a partial or total sale of assets," Beaudry said.

"Can a process like this now move forward in other co-operatives in Canada where the members aren't consulted?"

Harding said the judge noted the passion of the co-operative's members inher oral ruling.

He said an attempt by landlords of some of MEC's brick-and-mortarstores to intervene in the proceedings was also dismissed.

On Sept. 14, after struggling with sluggish sales, inventoryissues and increasing online competition, MEC filed for creditorprotection and announced its sale to a Canadian subsidiary of LosAngeles-based Kingswood.

In a statement, the company's board of directors said, "the salestrengthensMEC'sfinances and core operating business, preservesjobs, retains the vast majority of MEC's locationsand guaranteesmembers continued access to authentic advice and high-quality products at competitive prices."

Mountain Equipment Co-op was launched as a grassroots co-operative in 1971 with six members and about $65 of operating capital.

The company grew to roughly 5.8 million members, according to court documents. Members paid a one-time membership fee of $5 to join, which entitledthem to one share in the co-op and the right to shop at MEC.