Case Study
The Restructuring of The Loewen Group:
Life After Death

Prof. Ian Giddy, New York University

The Loewen Group (HBS Case 9-201-062)

In mid 1999 the Loewen Group, the second largest funeral company in North America, filed for Chapter 11 bankruptcy. In 2001 it emerged from bankruptcy under a new name.

Loewen Emerges from Bankruptcy Protection
December 07, 2001

After two and a half years, the Loewen Companies will emerge from bankruptcy protection.  On June 1, 1999, The Loewen Group Inc. ("TLGI") and approximately 120 of its subsidiaries had filed under the Companies' Creditors Arrangement Act ("CCAA").  TLGI concurrently had filed for protection under Chapter 11 of the U.S. Bankruptcy Code with approximately 870 of its U.S. subsidiaries.

On December 7, 2001, Mr. Justice Farley issued his final order in the CCAA proceeding recognizing and implementing in Canada the U.S. Plan of Reorganization.  The U.S. Plan of Reorganization effectively restructures over $3 billion in debt and approximately 1,000 operating companies.

The case has a long and storied history involving (a) the coordination of cross-border proceedings; (b) an enormous claims noticing process of over 187,000 potential claimants; (c)  the settlement of a dispute concerning the secured status of certain creditors to a Collateral Trust Agreement holding U.S. $1 billion in debt; (d) the application of s.18.6 of the CCAA and the first time in which a Canadian Court has implemented in Canada a U.S. Plan affecting Canadian debtors and Canadian creditors; and (e) the reorganization and amalgamation of in excess of 100 Canadian operating companies.

The new Canadian operating company will be known as Alderwoods Group Service Inc. and its head office will continue to be located in Toronto.


Life and Death: Loewen Dates


Raymond Loewen enters the funeral consolidation business.

27 December 1985
Raymond Loewen becomes chairman and CEO of the Loewen Group.

May 1987
The Loewen Group makes its IPO on the Toronto Stock Exchange under the symbol LWN.

August 1987
The Loewen Group enters the American market, making its first U.S. acquisition in California.

Loewen Group begins trading on NASDAQ.

September 1995
Stock hits record high of $55.50 by the end of September. Company ownes 1115 funeral homes and 427 cemeteries in U.S., Canada, and the United Kingdom.

Fall 1995
Henry J. Lyons swindles Loewen out of $3.2 million over the next three years.

2 November 1995
Loewen hit with $500 million civil lawsuit in Mississippi. Share price drops 15% the same day.

January 1996
Loewen settles $30 million lawsuit with Provident American in Pennsylvania.

17 September 1996
Loewen begins trading on the New York Stock Exchange. Service Corp makes formal offer to acquire Loewen in hostile takeover attempt.

Loewen makes first acquisition in the United Kingdom.

5 March 1997
Loewen reports record revenues of $81.4 million for year 1996.

August 1998
Loewen discloses that second quarter earnings were 56% lower than previous year.

8 October 1998
Raymond Loewen removed as chairman and CEO following the company's announcement of the previous day that third quarter earnings will be less than 13 cents a share, versus analysts' consensus estimate of 19 cents.

October 1998
Using an obscure NAFTA provision, the Loewen Group and Raymond Loewen file a $775 million claim against the U.S.

17 December 1998
The Loewen Group appoints three new outside directors: Thomas M. Taylor, John S. Lacey, and William R. Riedl.

14 January 1999
The Florida Department of Banking and Finance (DBF) suspends sixteen Loewen firms from further business due to financial irregularities.

June 1999
Loewen had the distinction of being the worst performing stock during the first six months of 1999, losing 93% of its value.

13 April 2000
The Loewen Group (LWN) is delisted from the New York Stock Exchange.

21 November 2001
The Loewen Group is delisted from the Toronto Stock Exchange.

2 January 2002
After emerging from bankruptcy, the reorganized company, now called the Alderwoods Group, Inc., begins first day of operations. The company owns and operates 798 funeral homes and 62 cemeteries in the U.S., Canada, and the United Kingdom.

Body Restructuring

Seemingly a magnet for trouble, Alderwoods found itself straightaway in the middle of a hotbed of negative publicity. San Diego locations of the Alderwood Group, and Loewen before it, have subcontracted with Pacific Crematory, whose former owner/operator, Mike Brown, was convicted of dismembering corpses and selling body parts. The alledged atrocities, numbering perhaps in the thousands, were perpetrated by Brown over several years without knowledge and permission of the family members. Alderwoods quickly ceased doing business with the Pacific Crematory following public release of the horrendous news. Brown is currently serving an extended prison term.

Alderwoods trades on the Nasdaq under the ticker AWGI.

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