Coverage of the latest Canadian insolvency filings, court cases, news and more
Sunniva Inc. (CNE: SNN), a Vancouver, British Columbia-based development stage business that has been developing facilities for the cultivation, processing, and distribution of raw cannabis flower and cannabis-based products — along with its subsidiaries — obtained protection under the CCAA on October 9. The company’s financial distress is caused primarily by cost overruns and construction delays regarding its primary business asset, a leasehold interest in an under-construction cannabis cultivation facility in California. In November 2018, the company announced its strategic decision to focus corporate resources on developing the company’s business in California and began liquidating its Canadian assets. The company and its subsidiaries intend to liquidate what remains of their Canadian assets and advance the business in California. On June 22, the British Columbia Securities Commission and Ontario Securities Commission each issued a cease trade order in respect of the company’s shares. The company, which has unsecured debts in excess of $58.0 million, is currently seeking an extension of the stay period so that the relief will continue until November 27. Alvarez & Marsal was appointed monitor. Counsel is BLG for the companies and Cassels Brock for the monitor.
Coulee Craft Brewing Corp., a Lethbridge, Alberta-based craft brewery company with a 16,000 sq. ft. brewing facility including a full-sized brewpub, was placed in receivership on October 13 on application by BMO, owed approximately $887.9 thousand. In a decision made by former management in December 2019, the company’s brewing production ceased and all of its employees were terminated. Subsequently, the brewery business, including inventory and the company’s goodwill, was listed for sale and the new management pursued leads on potential purchasers or investors. However, due to the COVID-19 pandemic, the company was unable to secure a firm offer before BMO’s receivership application was scheduled. Grant Thornton was appointed receiver. Counsel is Cassels for the applicant and Miles Davison for the company.
Family Fitness Inc., which operates four fitness centres in Regina, Saskatchewan under the business name “Evolution Fitness Gym”, was placed in receivership on October 13 on application by BTA Real Estate Group Inc. (“BTA”), owed approximately $1.0 million in rent arrears. In August 2017, the company defaulted on its rent obligations owing to BTA, and has continued to be in arrears since that date. BTA alleges that the company has engaged in a systematic pattern of non-payment and non-performance of its obligations. Alvarez & Marsal was appointed receiver. Counsel is W Law Group for the applicant and Torys for the receiver.
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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.