AS THE old soldier can never escepe the smell of gun powder, George Davis has seen past the current aviation battles to the in- evitable conclusion of the war, He tersely refers to the so-call- ed rescue plan for Canadian Airlines International: ‘it’s a sucker’s game."’ Davis, a West Vancouver in- dependent lawyer, may be the most gifted insolven- cy/receivership practitioner in the province. He has been a consultant to the federal government in bankruptcy matters, but he says that Cana- dian law “thas always been bad in the reconstruction of business, and it still is.”” He has acted for and against chastered banks, and he has worked his way through the morass of business disasters throughout his career. ta one celebrated U.S. bank case, Davis won for a client an $18 million settlement based on “ta breach of an oral contract to tend.” It sent shivers through the American banking system. David has just recently con- cluded a $35 million rescue of an Aracrican multi-level firm that had been locked in « Chapter 11 seconstruction. Despite $100 mil- tion in annual sates, the company has been in desperate straits. He has analyzed the PWA pro- Position ina dispassionate way. Translation: Gf you have PWA shares, they are worthless. "The cast of servicing the debt is far beyond the ability of the airline to pay, now or forever. There is na chance at all of the sonal 747, or find someone who _ ean afford to own and run the vichicle There is a great deal of talk in the industry about the value of Canadian as an operating entity: its prized routes and international marketing system. Davis is blunt about that: **They ere valueless as an asset to a secured creditor. Planes and real estate have value.”” Translation: Governments con- trol the awarding and transfer of flying rights. The marketing systeni is a cost, not a redeemable ‘security. If all of the hard assets _ were liquidated, it is ikely PWA Corp. “would still be over a billion ip det. After witnessing this autopsy on an airline, we asked George Davis if government shoaid just Rt mazket forces kill it of f? Answer: |The shock to the system would be too great. We can’t allow 16,000 jobs to disap- pear all at once.”” Can it be saved? “No ... reconstruction must create a new company, with a fool proof plan for success.’” Can this be done? **The solution is simple.”* Despite the precision of profes- sional analysis, Davis shares the emotional commitment most Westerners (eel about these airlines, He grew up in Fort St. James, where Grant McConachie of CP and Russ Baker of PWA were the stuff of legends. Davis’ father and brother were both bush pilots and both were tragically killed in separate avia- tion mishaps within months of each other. Following high school, George Davis joined the army, acquiring a commission. When he left the military in 1964 he began study at the Uni- versity of Victoria, wi:ich culmi- nated in a law degree from the University of British Columbia. 1 met him some years after that, when I was hot on the trail of Fantastic Fudge, a franchising swindle of slapstick proportions for everybody except those who had purchased a Pillsbury fudge- making machine and a basement full of ingredients. A trio of charming flim flam artists, complete with the obligatory diamond rings and Lincoin Continentals, had hood- winked dozens of investors out of several hundreds of thousands of Gary Bannerman OPEN LINES dollars, Davis was working for the Ca- nadian Imperial Bank of Com- merce. The shysters had conve- niently arranged a bank loan for anyone wanting to invest in their deal, Fudge Factory Holdings Ltd. Most of the suckers ended up being chased for payments by the bank. The bank was embarrassed and helpful, but it collected the funds it was owed. Sunday, December 6, 1992 ~ North Shore News - 9 Major player must handle Canadian rescue And Davis gave me an educa- tion in bankruptcy, collection, receivership and con games that became the foundation of many dozens of major media exposes. We have rarely met in recent years. When it was announced last weekend that PWA Corp. was stopping payment to all of its creditors, it seemed high time to renew the acquaintance. ““You have to do a hive out, so that the money you put in to run the company is not going to feed past probiems,’’ Davis told me. He sees the current proposals as noble but ridiculous, and he com- pliments the governments for ex- ercising restraint. **There are far too many players,’’ Davis said. He cited the failed but still present management, the employees’ council and its many unions, three governments, share- holders, creditors, affiliated com- panies and American Airlines. “Each of these entities ap- proach the problem with their own self-interest at the fore.” The rescue must be launched by one — and only one — major outside force, he said. This player — and it could be the British Columbia government — would enter the game with a onal Prepared rescue lan Everything would become part of the mix except excessive debt. All of the problems remain with PWA Corp. PWA could sort out its difficulties with the courts and the Gemini computer system. The new entity would offer the creditors, the employees, the gov- ernments, the existing sharehold- ers and new partners (American Airlines) a deal they couldn’t ref- use. A cynic might suggest that PWA management would dig in its heels and oppose this give- away of assets. | The truth is that PWA management, as of this past weekend, does not control its own density. A $1,000 creditor can force the airline into bankruptcy. The judge then becomes the chief executive officer. George Davis knows the recipe: a plan, a principal and a coopera- tive creditor. He has little doubt about a judge’s decision. He has been there before. ALE TRL 9 AFTER COMING To OUR MARKET, YOUR CHILDREN WILL BE GIFTED. For gifis that inspire the imagination and uelight the senses of the young and young at heart, visit our Second Floor Shops. You're sure to find something that wiil curn on the smiles Christmas morning. And here are some noteworthy events sure to bring you Christmas cheer: @ Members of the Vancouver Symphony Orchestra joined by the Vancouver Children’s Choir, Saturday, December 19th, 1 and 2 p.m. Come and sing along. ¢ Holiday Craft Making Workshops in the Food Count every Saturday & Sunday, between I lam & 2pm. « Samia’ Storytelling in the Roiunda every Saturday and Sunday. Noon - 4pm. © Community and school choirs performing daily til Christmas Eve Day. GOODWILL TOWARDS MEN IS A WONDERFUL TRADITION. We have always believed in giving back to the community. As in years past, we have set up a drop- off centre for non-perishable food and toys for the North Shore Christmas Bureau. This year we're starting a new, year-round tradition “Share our Strength” Bring fresh food donations to the booth located across from Tinos Bakery: WIN ATRADITIONAL FAMILY HOLIDAY. You could win an extended weekend trip for your farnily to the Big Bar Guest Kanch in the Cariboo. Contest rules and entry forms available from participating Second Floor merchants. Best of the season to you and yours. Late night shopping starts December 10th. Call 985-6261 for event or parking validation information.