The company at the heart of Conrad Black's business empire has been quietly put into bankruptcy, marking the end to a storied name in Canadian corporate history.
Yesterday, Mr. Justice Peter Cumming of the Ontario Superior Court approved a motion to place Ravelston Corp. Ltd. into bankruptcy effective Dec. 18. The company had been under the control of a receiver RSM Richter Inc. since 2005, when Lord Black first ran into trouble over allegations of fraud and gave up control of Ravelston. In a report filed in court this week, the receiver said its work was completed and it asked the court to approve the bankruptcy application. Court filings show Ravelston's only assets were $5.2-million in cash.
That money is expected to be divided between the Canada Revenue Agency, an Ontario pension plan administrator and Sun-Times Media Group.
Chicago-based Sun-Times was formerly known as Hollinger International Inc.
It's a far cry from Toronto-based Ravelston's heyday, when the company controlled some of Canada's largest businesses and eventually became the central piece of Lord Black's global newspaper chain.
Ravelston was founded in 1969 by a group of businessmen that included Bud McDougald, Max Meighen and Lord Black's father, George Montegu Black. The men derived the name from a suburb in Edinburgh, Scotland. At the time, Ravelston controlled Argus Corp. Ltd., which owned stakes in Dominion Stores Ltd., Massey-Ferguson Ltd., Standard Broadcasting Corp. Ltd., Hollinger Mines Ltd. and Domtar Corp.
Lord Black took control of Ravelston in 1978 and used it to transform the conglomerate into a newspaper giant under the Hollinger banner. Ravelston became the vehicle through which Lord Black and his trusted lieutenants controlled Hollinger companies in Toronto and Chicago and collected millions of dollars in management fees and dividends.
The company filed for protection under the Companies' Creditors Arrangement Act in April, 2005, just as allegations of fraud began to swirl around Lord Black and others. Lord Black and four other former Hollinger executives were later convicted of fraud over the diversion of more than $6-million (U.S.) from Hollinger International. Lord Black was also convicted of obstruction of justice.
In an unusual legal move, the U.S. Attorney's office in Chicago also charged Ravelston with fraud. Richter negotiated a plea bargain on the company's behalf last year. Under that agreement, the company pleaded guilty to fraud and agreed to pay a $7-million fine. However, the fine was listed as an unsecured claim in Ravelston's bankruptcy, ranking it below secured claims from the CRA and the pension administrator. As a result, the fine will not be paid.
Ravelston was also included in a multitude of civil lawsuits over the fall of Lord Black's empire. According to court filings, the company listed more than $1.4-billion (Canadian) in unsecured claims, most of which stemmed from allegations in various lawsuits.
The Ravelston bankruptcy came amid more bad news for Lord Black.
The U.S. Securities and Exchange Commission has filed a motion in a Chicago court seeking more than $13-million (U.S.) in damages from Lord Black for violating securities laws during his time at Hollinger. A Chicago judge has already barred Lord Black from serving as an officer or director of a U.S. public company.