Coverage of the latest Canadian insolvency filings, court cases, news and more
Gozco, a Calgary, Alberta-based investment firm, filed for bankruptcy in March 2018. PwC was appointed trustee. George Gosbee, who passed away in November 2017, was the company’s sole director, officer, and shareholder. Karen Gosbee, his spouse, is the personal representative of Mr. Gosbee’s estate. On January 7, PwC filed an application for an order declaring, amongst other things, that certain transactions granted by the company in favour of BNS (collectively, the “BNS Transaction”) constitute a transfer at undervalue and are void as against the trustee. Bowfort, the company’s primary creditor, had provided to the company a loan of USD $5.0 million secured by a promissory note dated January 2014. This loan was advanced to the company to assist in funding its USD $7.5 million investment in a US business venture. The company did not make any repayments of the loan to Bowfort other than certain baseline annual interest payments. On August 10, 2017, the Gosbees entered into a commitment letter with BNS to open a private and personal overdraft lending account. At their direction, the company completed a series of transfers whereby USD $750.0 thousand belonging to the company was transferred into this personal account, to the detriment of the company’s creditors. At the time the BNS Transaction was completed, the company was insolvent. It is alleged that there was no valid business purpose for the company entering the BNS Transaction, and by doing so, it breached its obligation to Bowfort. PwC alleges that the BNS Transaction was intended to defraud, delay, or hinder the company’s creditors. Bennett Jones is counsel to the applicant.
Tough Mudder Events, the Canadian subsidiary of a US-based company, Tough Mudder, which organizes endurance events involving obstacle courses in the mud, filed an NOI on December 30. The US-based company has been ensnared in a shareholder dispute which has negatively affected its operations. On January 7, Valley Builders, Trademarc Associates, and David Watkins Homes – certain of the company’s US creditors, which are owed in excess of $855.0 thousand – filed an involuntary petition for Chapter 11 bankruptcy in the US. The Canadian NOI was filed to stay creditors and allow the company to close an anticipated transaction for the non US-based businesses. Farber is the proposal trustee. TGF is counsel to the company.
Dion Global Solutions (Canada), the Canadian branch of a global financial technology company based in India, filed for bankruptcy on December 30, listing $4.5 million in liabilities, including $3.2 million to FTI Consulting Hong Kong and $1.3 million to FTI Consulting Singapore. Farber is the bankruptcy trustee.
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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.