Coverage of the latest Canadian insolvency filings, court cases, news and more
Motovan, a Montreal, Quebec-based distributor of powersports parts and accessories, obtained protection under the CCAA on December 2. An industry leader for over 30 years, the company expanded outside of Canada in 2015 through the acquisition of US-based Motorcycle Tires & Accessories LLC (MTA). The acquisition has not been successful though. The US company has generated negative EBITDA since its purchase, and the shift in management’s focus from the Canadian operations to the integration of MTA negatively impacted Canadian revenues as well. Despite attempts to cut costs and enhance various aspects of its operations, the company remains in breach of its fixed charge coverage ratio with its operating lender, BMO, and it does not have the liquidity to purchase the levels of inventory necessary to support its operations. The company intends to run a sales and investment solicitation process in consultation with its stakeholders while under creditor protection. KPMG is the monitor. Counsel is BCF for the company and Norton Rose Fulbright for the monitor.
Wayland Group (CSE: WAYL), an Oakville, Ontario-based licensed cannabis producer, obtained protection under the CCAA on December 2. Cash flow negative from its operations since inception, the company has relied on equity and debt financing for funding. The company is in the process of expanding its flagship production facility in Langston, Ontario, but requires additional funding, which has proven extremely challenging to obtain. A cease trade order was issued in May 2019 as result of the company’s failure to file its 2018 audited financial statements, and as such, the company cannot raise further funds from the issuance of securities. Without audited financial statements, it has also proven difficult to raise debt financing. Efforts have been made over the past 18 months to monetize the company’s assets outside of an insolvency proceeding, but these have been unsuccessful. While under creditor protection, the company will look to complete a restructuring – either through a plan of arrangement or compromise or through a sale of its assets. PwC is the monitor. Counsel is Osler for the company, Bennett Jones for the monitor, Cassels Brock for secured lender Cryptologic and Goodmans for the company’s debenture holders.
AgMedica, a Chatham, Ontario-based licensed cannabis producer, obtained protection under the CCAA on December 2. In anticipation of a potential IPO, the company devoted significant amounts of capital to expansion efforts in order to keep pace with other licensed producers in a highly competitive and capital intensive industry. As a result of changing market sentiments towards the cannabis industry, however, the IPO did not transpire. As an alternative, the company was in talks to secure a substantial debt financing package, but the potential lender also backed away. With no liquidity to fund ongoing operations, the company will look to run a sales and investment solicitation process while under creditor protection. EY is the monitor. Counsel is TGF for the company, McCarthy Tétrault for the monitor, Foglers for DIP lender Hillmount Capital and BLG for Stabilis.
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“Study the past if you would define the future.” Confucius’ quote is a favourite of Michael Rotsztain, who has been practising insolvency and restructuring law for over 40 years. Beginning his career at the legendary insolvency firm of Harries Houser, where he had the good fortune of being mentored by a bankruptcy law dream team, Michael spent the major part of his career at a leading Bay Street firm and since 2014 has been the chair of GSNH’s five-lawyer Restructuring and Insolvency Group. Michael recounts how insolvencies and restructurings have evolved over his career and shares what he thinks are the next steps in the evolution.
Richard Williams of James Williams & Associates alerts readers to new regulations that bring into question whether existing protections under the BIA and model orders are sufficient to protect trustees from liability associated with the inadvertent release of personal information.