Coverage of the latest Canadian insolvency filings, court cases, news and more
Maple Medi Pharma Inc. et al. (collectively, the “Debtors”), each of which owns or operates a pharmacy or owns the real estate on which a pharmacy is located, were placed in receivership on November 25 on application by 1951584 Ontario Inc. and CWB Maxium Financial Inc. (“CWB”), owed approximately $25.9 million on 19 promissory notes issued between 2015 and 2019. John Gerges, who is either a director, officer, or sole/significant shareholder of 19 of the 21 Debtors, is also a guarantor of a majority of the Debtors’ promissory notes with CWB. In January 2020, CWB learned that Gerges had been charged with possession of a Schedule I substance. News reports indicated that the York Regional Police had recovered more than $500.0 thousand in opioid pills and an illegal handgun during their investigation of an alleged opioid trafficking ring. Since the criminal charges were laid against Gerges, CWB also became aware that certain of the Debtors were operating without any liability insurance. CWB’s efforts to work with the Debtors with a view to consensually resolving the defaults have ultimately been unsuccessful and CWB has lost confidence in the Debtors’ management. msi Spergel (GRIP) was appointed receiver. Counsel is Miller Thomson for the applicants, Weisz Fell Kour for certain of the Debtors, DLA Piper for certain of the other Debtors, and GSNH for the receiver.
Nabis Holdings Inc. (CSE:NAB), a Canadian investment issuer that invests in high quality cash flowing assets across multiple industries, including real property and all aspects of the U.S. and international cannabis sector, filed a proposal on November 23 after entering into a support agreement with certain holders of the company’s outstanding unsecured convertible debentures in the amount of $35.0 million. Pursuant to this support agreement, the holders have agreed to support a recapitalization plan for the company which will be implemented pursuant to a BIA proposal. Previously, the company announced that Odyssey Trust Company commenced legal action against the company alleging a breach of the terms of the debentures as a result of a missed interest payment. In light of the company’s liquidity constraints, the company believes that the recapitalization, including the proposal and support agreement, are in the best interest of the company and its stakeholders. KSV is the proposal trustee. Counsel is McMillan for the company, Bennett Jones for the debenture holders and Chaitons for the proposal trustee.
Globeways Canada Inc. (“Globeways”), a Mississauga, Ontario-based company that carries on business as a processor and wholesaler of pulse crops, was placed in receivership, along with its subsidiaries, on November 19 on application by TD, owed approximately $13.0 million (CAD) and $84.1 thousand (USD). By September 2019, Globeways was in default of a number of covenants in its banking arrangements with TD, including substantial defaults in financial reporting and borrowings that exceeded the authorized amount. Partly in order to address liquidity concerns, the companies sold three of their formerly-owned processing pants in Saskatchewan to an unrelated party. However, following the closing of the sale, the companies remained in default of their covenants with TD. Furthermore, since the companies’ operations are regulated and subject to licenses issued by the Canadian Grain Commission, they must post security and maintain adequate claims insurance for their obligation to farmers. However, due to significant claims advanced by certain unpaid farmers, the insurer of such policies has delivered notices of cancellation to the companies. Without adequate insurance and security to satisfy the statutory requirements, the companies cannot continue operations. BDO was appointed receiver. Counsel is Aird & Berlis for the applicant, MLT Aikins for the receiver, and Simmons da Silva for the companies.
SUBSCRIBE TO OUR NEWSLETTER
Subscribe to our newsletter and stay up-to-speed on industry news
Over $16.5 billion has been set aside since March by Canada’s six largest banks to cover credit losses. While we haven’t yet seen the wave of corporate loan defaults and insolvency filings, it is on the horizon and bankers and restructuring professionals need to be prepared. Join us for a valuable half-hour discussion in which our expert panel will share valuable information for bankers, trustees, insolvency lawyers and other restructuring professionals.
“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.