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Action No. 0903 06823
Bankruptcy No.: 24-115167
Respec Oilfield Services Ltd.
MONITOR’S TWELFTH REPORT
DECEMBER 8, 2009
Action No. 0903 06823
Bankruptcy No.: 24-115167
IN THE COURT OF QUEEN’S BENCH OF ALBERTA
JUDICIAL DISTRICT OF EDMONTON
IN THE MATTER OF THE BANKRUPTCY & INSOLVENCY ACT,
R.S.C. 1985, c. B-3, AS AMENDED
AND THE COMPANIES’ CREDITORS ARRANGEMENT ACT,
R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF
RESPEC OILFIELD SERVICES LTD.
(“Respec” or the “Company”)
TWELFTH REPORT TO THE COURT
SUBMITTED BY PRICEWATERHOUSECOOPERS INC.
IN ITS CAPACITY AS MONITOR
1. Paragraph 11 of the Court Order dated October 8, 2009 states that the Monitor is to
report, biweekly, on any matters which it deems to be of interest.
2. By a Notice of Motion dated December 4, 2009 and filed on December 7, 2009, the
Company seeks payment of certain costs and expenses.
3. Pursuant to paragraph 11, of the October 8, 2009 Court Order and in response to the
Notice of Motion, the Monitor advises the Court on the following:
(i) The Monitor’s comments to the unsworn affidavit of Douglas Rewega dated
November 30, 2009;
(ii) Pre-receivership liabilities for wages and other amounts outstanding prior to
the granting of the receivership order, to assist the Court in dealing with the
application of the Company to pay post CCAA/pre-receivership costs and
expenses;
(iii) Other matters.
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AFFIDAVIT OF DOUGLAS REWEGA DATED NOVEMBER 30, 2009
4. On November 25, 2009, the Monitor sent its Eleventh Report to the Court (dated
November 25, 2009) (the “11th Report”) to the service list and its legal counsel. The 11th
Report was subsequently filed with the Court by the Monitor’s legal counsel on
November 26, 2009.
5. In this report, the Monitor advised that it was of the view that a further extension of the
stay is not warranted. In addition, the Monitor advised that it had made certain requests
for information from the Company and that the Company had not responded to its
requests at that time.
6. On November 30, 2009, an unsworn affidavit of Douglas Rewega (the principal of
Respec) was filed with the Court in support of an application for the staying provision to
be continued until January 15, 2010 (the “Rewega Affidavit”).
7. In his affidavit in support of an extension, Mr. Rewega states that he does not agree with
certain statements in the 11th Report that the Company has not been forthcoming with
information to the Monitor. Mr. Rewega then outlines what he refers to as “errors” in the
11th Report.
8. We have reviewed the Rewega Affidavit and the Monitor disagrees with a number of
statements made, specifically, paragraphs 11, 12, 14, 15, 16, 17 and 19. The Monitor will
be preparing a further report addressing each of the issues raised in these paragraphs in
the Rewega Affidavit.
PRE-RECEIVERSHIP LIABILITIES FOR WAGES AND OTHER AMOUNTS
OUTSTANDING
Payroll
9. The Monitor has previously advised the Company and Canadian Western Bank that it has
concerns with respect to the high payroll costs for the last three payroll periods compared
to the level of revenues. It was our understanding that the Company would be reducing
its operations, attending to the transportation of the equipment to Ritchie Bros. utilizing
its equipment and employees and terminating non-essential employees.
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10. The Company was to keep a record/log book of each piece of equipment moved by
Respec employees so that the Monitor could properly allocate costs incurred to each of
the PMSI creditor’s equipment. In addition, the Monitor would be in a position to
confirm the validity of all moving expenses and employee hours when these expenses
were compared to payroll.
11. The Monitor has not yet been provided with sufficient documentation regarding the costs
of transportation of equipment and will be working with Ms. Grace to obtain the required
information. Ms. Grace is the former office manager of Respec and has been retained by
the Receiver.
12. In addition, we are concerned about payments made to certain entities that may be owned
by persons related to Mr. and Mrs. Rewega. Accordingly, we conducted a company
search of companies referenced in relation to the transportation of equipment or
subcontractors paid through Ceridian. The results are as follows:
(a) Duffy Enterprises Ltd. – owned by David Driedger;
(b) Black Stallion Ventures Ltd. – owned by Andrew Driedger;
(c) 743091 Alberta Ltd. – owned by Karl Driedger;
(d) Silverline Contracting Ltd./891503 Alberta Ltd. – owned by
Ernest Driedger;
(e) K&N Contracting – based on documents we have reviewed
K&N appears to employ Karl Driedger and Nellie Driedger;
13. We understand Mrs. Rewega’s maiden name is Driedger and her brothers are David,
Andrew, Karl and Ernest Driedger.
Payroll for the period November 14, 2009 to November 27, 2009
14. On December 1, 2009, the Monitor received a request for payment of the payroll for the
period November 14, 2009 to November 27, 2009 totalling $126,292.73 (including the
employer portion of CPP and EI). Attached as Exhibit 1 is a copy of the email received
from the Company with the 1 page Ceridian payroll summary.
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15. On December 1, 2009 the Monitor responded advising that all bank accounts were frozen
as a result of the receiver being appointed on November 30, 2009 and that payroll would
not be processed at this time. Attached as Exhibit 2 is a copy of this email.
16. The Monitor requested additional documentation including a breakdown of the wages per
employee and supporting documentation for the subcontractors for the period November
14, 2009 to November 27, 2009. Attached as Exhibit 3 is a copy of the summary
received.
17. The schedule reflects the following proposed payments totalling $124,806:
(i) Employees - $61,532
(a) Individuals (excluding the Rewegas) - $30,697
(b) Rewegas (Lisa, Doug, Scott) - $20,705
(c) Consultants – $10,130
(ii) Subcontractors – $63,274
18. We advise that we have yet to receive a copy of the supporting documentation for the
subcontractors.
19. Based on the documentation provided, the Monitor recommends that all individual
employees should be paid their outstanding wages which total $51,402 of the $61,532.
20. With respect to the other amounts due to consultants totalling $10,130, the Monitor
recommends that the following not be paid:
(i) Domville & Associates ($3,750) – we are advised that this company provides
consulting services to assist Respec in sourcing projects.
(ii) Mahut Kadir, a total of ($6,380) - we are advised that Mr. Kadir is a
consultant who was hired to source projects overseas.
These amounts do not appear to relate to the moving of equipment and the Monitor
questions why these consultants should be paid in light of the October 8, 2009 Court
Order which directs that the Company shall not to enter into any new projects.
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21. With respect to the subcontractors, the Monitor requires additional information regarding
the amounts proposed to be paid to them. Over the preceding two pay periods,
significant payments were made to these subcontractors, many of whom are related to the
Rewegas. We set out below a summary of preceding two payrolls and the proposed
payment for the period November 14, 2009 to November 27, 2009:
(i) 743091 Alberta Ltd. – Karl Driedger
(a) Oct 17 – Oct 30 - $12,521 net
(b) Oct 31 – Nov 13 - $31,290 net
(c) Nov 14 – Nov 27 (proposed) – $27,200 gross
(ii) Silverline Contracting – Ernest Driedger
(a) Oct 17 – Oct 30 - $13,981 net
(b) Oct 31 – Nov 13 - $13,614 net
(c) Nov 14 – Nov 27 (proposed) – $11,989 gross
(iii) Mike Fedelleck
(a) Nov 14 – Nov 27 (proposed) - $20,975 gross
22. The Monitor has yet to receive the supporting documentation relating to these charges;
however, if the charges relating to the moving of equipment are valid, subject to review
of the Monitor, the Monitor proposes that these amounts be paid.
Other Amounts Owing
23. The Monitor understands the application by the Company’s legal counsel is that all post-
CCAA/pre-receivership amounts are to be paid. If the Court is prepared to direct this
then the Monitor recommends that prior to payment being made, the Monitor be provided
with the proper supporting documentation to confirm these amounts and that the Monitor
file a report setting out the results of its review.
OTHER MATTERS
Amount Due to Lisa Rewega for Expenses
24. We understand Mrs. Rewega will be submitting expenses to the Monitor relating to
amounts charged on her personal credit card with respect to expenses incurred on behalf
of Respec.
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25. The Monitor has yet to receive the supporting documentation relating to these charges;
however, if the expenses are valid in relation to the moving of the equipment, subject to
review of the Monitor, the Monitor proposes that these amounts be paid.
Amount Due to George Rewega
26. On August 31, 2009, the Monitor received a request for payment to George Rewega. We
understand George Rewega is Doug Rewega’s father.
27. The proposed payment related to invoices that were issued by Respec to Arctic Canada
Construction Ltd. and Concept Energy Services Ltd. in the amount of $15,876. The
Company proposed to issue payment to George Rewega in the amount of $15,876.
28. The Monitor inquired as to the nature of this proposed payment. The Monitor has not yet
received a sufficient explanation to approve the payment. Attached as Exhibit 4 is the
email chain in relation to this issue.
Amount Due to Flex Controls
29. On November 10, 2009, the Company proposed to pay Flex Electric & Controls (“Flex”)
$9,821.44 for upgrading electrical systems at the Company’s camp. It is our
understanding these camps were leased to the Company by Wells Fargo.
30. The Monitor raised concerns as to why the Company was incurring expenses to upgrade
third party assets at a time when the Company was aware that all equipment was to be
moved to the Ritchie Bros. auction.
31. Attached as Exhibit 5 is a copy of the email chain regarding this issue.
32. We are not aware of any non-arms’ length relationship between Flex and the Rewegas.
The Monitor respectfully submits to the court this, its Twelfth Report.
Dated this 8th day of December 2009.
PricewaterhouseCoopers Inc.
In its capacity as Monitor of
Respec Oilfield Services Ltd.
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Action No. 0903 06823
Bankruptcy No.: 24-115167
IN THE COURT OF QUEEN'S BENCH OF ALBERTA
JUDICIAL DISTRICT OF EDMONTON
IN THE MATTER OF THE BANKRUPTCY & INSOLVENCY
ACT,
R.S.C. 1985, c. B-3, AS AMENDED
AND THE COMPANIES’ CREDITORS ARRANGEMENT
ACT,
R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE
OR ARRANGEMENT OF RESPEC OILFIELD
SERVICES LTD.
TWELFTH REPORT OF THE MONITOR
PRICEWATERHOUSECOOPERS INC.
1501 Toronto Dominion Tower
10088 – 102 Avenue
Edmonton, AB, T5J 3N5
Telephone: 780.441.6700
Exhibit 1
Exhibit 2
Exhibit 3
Respec Oilfield Services Ltd
Employee's
Name Gross Pay Vac Pay CPP EI Tax Expense Net Pay
DOmville & Associates Consulting 3,750.00 156.25 1,010.75 2,895.50
Driedger, Scott 5,300.40 100.40 1,152.65 4,147.75
Dryden Michelle 4,425.67 175.67 1,197.74 3,227.93
Grace Mary 3,645.83 145.83 917.00 2,728.83
Hunter, Craig 1,052.43 44.43 105.30 947.13
Kadir, Mahmut A 6,380.21 255.21 1,947.09 4,433.12
Loranger Roland 3,601.73 66.73 901.12 2,700.61
Maillet Joseph 2,760.92 67.17 614.77 2,146.15
Martin, Marcel 3,208.17 70.67 759.44 2,448.73
Near Diane 1,045.83 45.83 45.11 18.09 115.26 867.37
Rewega Lisa 4,989.11 291.67 2,302.56 4,989.11
Rewega, Douglas George 10,416.67 416.67 3,528.35 6,888.32
Roble Jenny 2,623.74 38.15 570.87 1,884.87
Santiago Bibiana 1,145.83 45.83 50.06 19.82 138.59 937.36
St. Jean, Eugene 3,135.00 66.00 734.47 2,400.53
Tomilin, Mike P. 2,121.89 42.93 91.00 34.13 362.61 148.96 1,634.15
Wilson, Rosalinda U 1,929.32 69.32 88.84 33.38 348.65 1,458.45
61,532.75 2,098.76 275.01 105.42 16,707.22 148.96 46,735.91
Subcontractors
Name Gross Pay GST Net Pay
743091 Alberta Ltd O 27,200.00 1,360.00 28,560.00
Mike Fedelleck, 861178 Ab Ltd 20,975.00 1,048.75 22,023.75
Silverline Contracting Ltd. 11,989.49 599.47 12,588.96
60,164.49 3,008.22 63,172.71
Exhibit 4
Exhibit 5
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Action No. 0903 06823
Bankruptcy No.: 24-115167
IN THE COURT OF QUEEN'S BENCH OF ALBERTA
JUDICIAL DISTRICT OF EDMONTON
IN THE MATTER OF THE BANKRUPTCY & INSOLVENCY
ACT,
R.S.C. 1985, c. B-3, AS AMENDED
AND THE COMPANIES’ CREDITORS ARRANGEMENT
ACT,
R.S.C. 1985, c. C-36, AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE
OR ARRANGEMENT OF RESPEC OILFIELD
SERVICES LTD.
TWELFTH REPORT OF THE MONITOR
PRICEWATERHOUSECOOPERS INC.
1501 Toronto Dominion Tower
10088 – 102 Avenue
Edmonton, AB, T5J 3N5
Telephone: 780.441.6700
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