Coverage of the latest Canadian insolvency filings, court cases, news and more

Destiny Bioscience Global Corp.

Destiny Bioscience Global Corp., a Nisku, Alberta-based cannabis genetics and tissue culture research and development company — along with its subsidiaries — were placed in receivership on May 22 on application by Synergy Projects (Destiny) Ltd. and Synergy Projects Ltd. The Bowra Group was appointed receiver. DLA Piper is counsel to the companies.

First Hamilton Holdings Inc.

First Hamilton Holdings Inc., a Toronto, Ontario-based investment corporation specializing in high yield bonds, along with its subsidiaries, was placed in liquidation on May 21, listing approximately $34.0 million in liabilities. The company, whose business is closely related to PACE Securities Corp. (“PSC”), attributes its financial difficulties to various factors, including the COVID-19 pandemic, which resulted in the company having to respond to margin calls by Laurentian Bank Securities (“LBS”), PSC’s carrying broker and the custodian of the securities of the company’s clients. While the company was able to reach certain arrangements with LBS in April, the company was required to liquidate significant portions of its portfolio of corporate bonds to meet LBS’ new margin requirements. This reduction in the assets of the company’s portfolio meant lower interest income from the corporate bonds which it held. The company was also forced to sell its corporate bonds at prices substantially less than their acquisition costs. MNP was appointed liquidator. Dickinson Wright is counsel to the companies.

Green Growth Brands Inc., GGB Canada Inc., Green Growth Brands Realty Ltd. and Xanthic Biopharma Limited (collectively, the “GGB Group”) (GGB:CNX),

Green Growth Brands Inc., GGB Canada Inc., Green Growth Brands Realty Ltd. and Xanthic Biopharma Limited (collectively, the “GGB Group”) (GGB:CNX), a cannabis enterprise that is licensed to grow, process and sell cannabis in various US jurisdictions, obtained protection under the CCAA on May 20, listing over $100.0 million (USD) in liabilities. The GGB Group, which was funded through equity and debt, has always been cash flow negative. Commencing in early 2019, the Group began to experience liquidity issues. These problems were compounded by the COVID-19 pandemic, and the GGB Group was forced to indefinitely suspend its business selling CBD-infused consumer products. All Js Greenspace, one of GGB Group’s existing secured lenders, will be providing up to $7.2 million (USD) in DIP funding during these CCAA proceedings. EY was appointed monitor. Counsel is Stikeman Elliott for the companies, Osler for the monitor, and McMillan for All Js Greenspace.

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Michael Rotsztain on the evolution of restructuring and insolvency work in Canada

“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.

Authority to Bar a Creditor From Voting & Litigation Funding as Interim Financing : The Supreme Court of Canada’s Ruling in Bluberi

Sylvain Rigaud, Arad Mojtahedi and Saam Pousht-Mashhad of Norton Rose Fulbright analyze the recently released written reasons in the Bluberi case, noting that the unanimous decision of the Supreme Court, penned by Chief Justice Wagner and Justice Moldaver, reverses the decision of the Québec Court of Appeal, reinstates the supervising judge’s order, and enshrines the recognition of an insolvency court’s wide discretion to, inter alia, approve a litigating funding agreement as interim financing, and to prevent a creditor from voting on a plan where it is found that said creditor is acting for an improper purpose.

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