Official records show that B.C.'s provincial government could be out about $2.51 million following the bankruptcy of Small Business BC.
But those same documents also point to the possibility that the amount could be higher. They also raise several additional questions about the exact causes of the bankruptcy, as well what government knew and when.
Small Business BC was a non-profit organization that helped British Columbians start their own small businesses prior to declaring bankruptcy on Dec. 5, 2024. It happened in the midst of growing concerns about the state of small businesses in B.C, representing 98 per cent of all businesses.
The organization received support from the province, as well as the federal government. The bankruptcy trustee's preliminary Dec. 19 report Dec. 19 available lists two provincial ministries as claimants.
B.C.'s Ministry of Social Development and Poverty Reduction claims $1.717 million, while B.C.'s Ministry of Jobs, Economic Development and Innovation claims just under $794,000 for a grand total of about $2.51 million. But this figure is smaller than the respective figures cited by Social Development and Poverty Reduction Ministry staff in two letters to SBBC dated Nov. 20 and Nov. 21.
The letter dated Nov. 20 calls on SBBC to return just under $2.056 million, while the letter dated Nov. 21 calls on SBBC to return just over $2.24 million. Both letters also inform SBBC that the ministry would cancel its respective contracts with SBBC because of its "insolvency," a different category than 鈥渂ankruptcy.鈥�
A statement from the Ministry of Jobs, Economic Development and Innovation, which serves as the point organization in government's response, says the letters were "written as a proactive measure to protect public dollars once (Social Development and Poverty Reduction Ministry) learned of their financial difficulties" after SBBC had informed the ministry of its financial difficulties and were working to assess options to resolve the problem.
The statement directed questions about the difference between the Social Development Ministry's formal claim of $2.51 million and the total cited in both letters 鈥� almost $4.3 million 鈥� to the trustee, but confirmed that SBBC did not return the money prior to Dec. 5. The statement added that the Social Development Ministry is working with the trustee to review claims in relation to these agreements.
When asked whether Social Development and Poverty Reduction Ministry is considering legal actions to recover outstanding public funds, government's statement said that the ministry awaits "further information," as well as "full reporting from the trustee to determine next steps."
The Jobs Ministry's claim might also change.
The trustee said in a statement that her office is still reviewing the books and records of SBBC and assessing creditor claims.
The provincial government is not the only major public body with claims against SBBC.
The trustee's report shows the Government of Canada with an outstanding claim of $1.78 million. But the documents also show that more money might be at stake. A letter dated Dec. 4 鈥� a day before SBBC filed for official bankruptcy 鈥� calls on SBBC to return about $4.5 million in "unexpended advance payments" for services.
Total official claims against SBBC as listed in the trustee's report add up to just under $5.65 million. SBBC's officially listed liabilities total $5.73 million, while official assets add up to $5.34 million. But report also points out that several line items in both the liability and asset column remain "unknown" awaiting further clarification.
The trustee's preliminary report says that SBBC's "primary causes of bankruptcy" relate to the business awards, which SBBC had sponsored in the past, a re-design of its website and issues around a Social Devlopment Ministry program that provides awareness, education and support of accessibility issues and solutions in small businesses.
According to the document, SBBC was "overly optimistic about government funding sources," underestimated or excluded salary costs from program or initiative budgets and ran its business awards program at a "significant deficit."
The trustee's report also points to what it describes as "co-mingling certain program funds with general operating funds." When asked for additional details about what that phrase meant, the trustee's statement did not offer specifics other than her office is still reviewing the books and records of SBBC and assessing creditor claims.
In the Social Development Ministry's Nov. 20 letter, it says that the province "has identified Events of Default for failing to use the grant only for the purpose of carrying out" agreed upon services.
When asked to comment about the relationship between the "co-mingling (of) certain program funds" and the "Events of Default" cited in the Nov. 20 letter, government 's statement said that the ministry awaits "further information," as well as "full reporting from the trustee to determine next steps."
Based on the two letters from the Social Development Ministry, staff there knew of financial issues at SBBC for at least little more than two weeks before the official bankruptcy declaration. When asked for a precise date about when staff became aware of SBBC's financial situation, the government statement said November, adding the ministry became aware of the bankruptcy filing on the day it happened.
It added that SBBC is an independent non-profit organization and that the province does not manage SBBC's financial operations.
"It would have been premature for us to presuppose the decision of the SBBC board," it reads.
Victoria, along with Ottawa, had a representative serving on SBBC's board of directors. According to government's statement, that representative was to become a non-voting member at SBBC's general annual meeting in November, but since that meeting was not scheduled, the appointee resigned Nov. 15, so before Dec. 5. One other board member resigned before Dec. 5, the rest on Dec. 5.
Conservative Kelowna-Mission MLA Gavin Dew last year asked B.C.'s acting auditor general Sheila Dodds to investigate SBBC's bankruptcy. Speaking to Black Press Media, Dew said he has asked for an update on his request, adding that the trustee's report "only reinforces" his "suspicion that two levels of government knew what happened" but tried to keep it from becoming an election issue.
"They could easily have put in a turnaround CEO, kept front-line staff supporting businesses that needed help, put up guardrails to protect taxpayer dollars, and gotten Small Business BC refocused on its core mission," he said.
Dew added he plans to keep this issue in the public's eye.
"When the legislature finally convenes on Feb. 18th, you can bet this will come up in Question Period," he said.
