N.B., Atcon may part ways: minister

New Brunswick's finance minister says the province has supported the Atcon Group in the past, but may part ways with the financially troubled company in court.

Greg Byrne said the government stands behind the accounting firm Ernst and Young as it tries to restructure the Atcon Group, despite the fact that Atcon CEO Robbie Tozer tried to have the firm removed as the company's court-appointed monitor this week.

"Mr. Tozer is, I'm sure, taking the decisions that he believes are in his best interests and in the best interests of the company," Byrne said.

'The province of New Brunswick also has to take those decisions that we believe are in the best interests of taxpayers.' Finance Minister Greg Byrne

"However, the province of New Brunswick also has to take those decisions that we believe are in the best interests of taxpayers. We support the monitor and the bank in this process."

Two weeks ago, five of the Miramichi-based Atcon companies were placed into receivership, while seven others were placed under creditor protection after Atcon's main lender, Scotiabank, called in its loans.

Ernst and Young has been reviewing the Atcon companies, trying to find ways to restructure them, or sell their assets.

On Monday, Tozer accused the accounting firm of being in a conflict of interest because it also serves as the receiver for five of the Atcon companies. He asked the court to name another monitor, but his request was denied.

Tozer also said he plans to appeal the court order that put some of the Atcon companies in receivership.

In court documents, Ernst and Young officials claim Tozer often hasn't been in the Atcon office to meet with them.

Scotiabank officials also allege in their March 14 affidavit filed with the court that Tozer has often rejected their advice. They say the Atcon companies are "hopelessly insolvent."

The bank said Tozer did not tell them that Shell had cancelled a major contract for Atcon work in Albertaa contract that Tozer himself had described as vital to Atcon's restructuring.

"The bank's unwillingness to proceed with providing any financing to Mr. Tozer was a result of Mr. Tozer's lack of disclosure and the bank's loss of complete confidence in his ability to fix the companies' problems or his ability to deal with the bank in an open manner," the affidavit states.

The bank's allegations have not been proven in court.

Tozer was unavailable to comment Tuesday when contacted by CBC News.

Government ignored advice: Opposition

The bank says Atcon owes its creditors about $250 million, though Tozer says in his March 12 affidavit that $96 million of that will be recouped when various leases expire.

Last year, the New Brunswick government extended three different loan guarantees to Atcon worth a combined $50 million.

A lawyer for the government told the Court of Queen's Bench in Miramichi Monday that the province will have to pay Scotiabank the $50 million as early as this week and then seek repayment as a creditor.

In the legislature Tuesday, Opposition Leader David Alward alleged that bureaucrats had recommended against the loan guarantee.

"The staff of the department said there was a huge amount of risk with this deal and the premier and the ministers chose to ignore them," he said.

The finance minister countered with what has become the standard defence of the Atcon loan guarantees the need to protect jobs during a global recession.

"We've all seen what's happened with the economy. We've seen what's happened in other parts of the country. We've seen what's happened south of the border."

But documents show that Atcon was in trouble, defaulting on Scotiabank payments in October 2007 - a year before the recession hit.

If the province does have to pay the $50 million, it won't add to the deficit, Byrne said. The province accounts for possible losses every year in its budget.

Atcon is scheduled to return to court in Miramichi on March 22.