Coverage of the latest Canadian insolvency filings, court cases, news and more
TGF Acquisition Parent Ltd., Sun Rich Fresh Foods Inc. and Tiffany Gate Foods Inc., British Columbia companies which are part of a larger group known as the Fresh Food Group (the “Group”), filed for protection under the CCAA on February 17, listing in excess of US$150,000,000 in liabilities, including US$119,000,000 to Cortland Capital Market Services LLC, as administrative agent to various lenders. The Group, which includes several US entities that filed for Chapter 11 protection on February 15, is a leading provider of branded and private-label offerings of fresh-cut fruits and vegetables, ready-to-go meals and meal kits, behind-the-glass salads, and other products. In 2019, the Group faced significant liquidity and other economic pressures, forcing it to implement certain strategic measures, including entering into an exchange transaction to restructure its indebtedness with its then existing lenders. Despite the exchange transaction, the Group has continued to face significant financial challenges in the context of its business operations, most recently due to economic pressures caused by the COVID-19 global pandemic. More specifically, in 2020, the demand for the Group’s largest product segments, fruits and vegetable trays, significantly declined as consumer habits began to change, and as the various federal, provincial and state governments in both Canada and in the US began imposing various sanitary measures and restrictions to prevent or limit the spread of the COVID-19 virus. These issues, combined with production and supply chain issues, have significantly affected the Group’s liquidity position throughout 2020. EY was appointed monitor. Counsel is Stikeman Elliott for the companies and TGF for the Monitor.
JD Norman Canada, ULC, a Windsor, Ontario-based manufacturer of highly engineered metal components for the automotive industry, was placed in receivership on February 12 on application by Callidus Capital Corporation (“Callidus”), owed approximately $146.0 million (USD). The company’s largest customer, General Motors (“GM”), representing close to 100% of its business, terminated its business relationship with the company and, as such, the company is no longer able to operate as a viable going concern. In January 2020, the company indicated to GM that it was experiencing severe financial difficulty and would be unable to remain in business without obtaining certain financial accommodations from GM and Callidus. Subsequently, GM entered into an agreement with the company and Callidus in which GM agreed not to resource any of GM’s business to a different supplier until at least February 2023. However, in November 2020, after GM claimed that the company had breached its obligations under this agreement, GM notified the company of its intention to resource a substantial portion of GM’s business to a new supplier. KSV Advisory was appointed receiver. Counsel is McMillan for the company, Dickinson Wright for the applicant, Osler for the receiver, and Norton Rose for Bank of America, the operating lender.
Calgary Oil & Gas Syndicate Group Ltd., a Calgary, Alberta-based producer of natural gas and natural gas liquids, along with various other related entities (collectively, the “Group”), filed for protection under the CCAA on February 11, 2021, listing approximately $42.89 million in liabilities, including approximately $27 million to Crown Capital Partner Funding, LP. As a junior energy producer, the viability of the Group’s business operations is highly dependent upon oil and gas commodity pricing. As such, the Group has been significantly impacted by challenging market conditions in the Canadian oil and gas industry, including the protracted depressed oil and gas pricing, as well as market volatility due to several factors such as the COVID-19 pandemic. BDO was appointed monitor. Counsel is BLG for the Group and MLT Aikins for Crown Capital Partner Funding, LP.
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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.
Chandos Construction Ltd. v. Deloitte Restructuring Inc.: Anti-Deprivation Rule Exists in Bankruptcy Law
Romain Viel, Hilary Gilroy and Colin Boyd of McInnes Cooper discuss the key takeaways from the Supreme Court of Canada’s decision in Chandos Construction Ltd. v. Deloitte Restructuring Inc. and provide guidance on the precise scope of the anti-deprivation rule, including the types of clauses that would not violate the rule.