Glendale logoShareholders and potential creditors of Canadian RV builder Glendale International Corp. have many reasons to be bewildered by recent events at the company that manufactures recreational vehicles that culminated eight days ago when it filed “a voluntary assignment in bankruptcy,” a decision the directors said “was in the best interests of the corporation’s stakeholders.”

All the directors of the company that has operations in Alberta and Ontario have resigned and Ernst & Young is the official receiver.

The bewilderment comes on at least two levels, according to the National Post.

It was a surprise.

When it reported its third-quarter results last Oct. 13 Glendale had $23.2 million in shareholders equity, no long-term debt and more than $11 million in net current assets. In its filing with E&Y, Glendale said it had a deficiency of $549,098 with its two biggest liabilities being $7.792 million for employees severance and termination pay and $1.8 million for Morneau Sobeco, a pension fund consultant. On the day before it filed, Glendale’s shares traded at 56 cents.

Last October, Glendale said its third-quarter loss had lessened, in part, because “the decline in the RV industry appears to have levelled off.” It added that “while the sale upturn is encouraging we still expect a long and slow recovery.” And last week it said “there does not appear to be a significant rebound of the Canadian RV industry.”

On the same day that Glendale filed, an analyst at Thompson Research Group said that based on dealer sentiment obtained at the 2010 Florida RV SuperShow things were changing. “We have been speaking about an inflection point for the last several months, and this show not only supports that thesis but also appears to signal the industry is in recovery mode.”

The status of a loan made by the company to senior management.

Back on Nov. 2, 2007, Glendale loaned $4.45 million to five shareholders of a private company, (MBO Co.) “as part of their debt restructuring with a Canadian chartered bank.” MBO Co. was formed in 2003 to buy a block of shares in Glendale owned by Morgan Firestone, a Glendale director. Edward Hanna, chief executive is a MBO Co. shareholder. In 2007 he earned $922,720; in 2008 he took home $616,166.

At the time it seemed like a normal loan. “The note is due on demand, bears interest at 5% and is secured by a first priority interest in the common shares of MBO company,” said a note to the 2007 annual report. At the time the shares were worth $9.05-million — or more than twice the value of the loan.

One year later the loan was described in different terms.

In its 2008 annual report, published in February 2009, this was added. The notes “are non-recourse to the shareholders of MBO Company.” By making the loan nonrecourse, it would seem Glendale didn’t have any ability to collect on the monies it had lent. Glendale gave no explanation as to why it changed the terms of the loan.

At that time, the shares were worth $652,000 — or one-seventh the value of the loan.

Some shareholders are less than impressed. David Martin, based in Kelowna, wonders why the MBO loan was not included in the list of assets filed by Glendale in the bankruptcy and if Ernst & Young will attempt to get the monies returned.

Calls to Hanna seeking a comment weren’t returned by press time.