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

Manitoba Clinic Medical Corporation (“Medco”)

Manitoba Clinic Medical Corporation (“Medco”), which operates the largest private healthcare clinic in Manitoba, and The Manitoba Clinic Holding Co. Ltd., which owns the real property where the clinic operates, obtained an initial order under the CCAA on November 30. Medco plays a significant role in Manitoba’s healthcare system, generating 90% of its revenue by billing the Manitoba Department of Health for services performed by physicians who enter into service agreements with Medco. In 2010, plans were made to construct a state of the art, ten-floor facility and to add two floors to the existing parkade, which was to be done in partnership with the CancerCare Manitoba Foundation. However, the second phase of construction, which was the construction of a new facility for CancerCare, did not proceed, and the companies were left with the large parkade. 52,000 square feet of space in the facility also remains unoccupied. In addition, in the past year, the companies have suffered losses due to, among other things, recent physician departures and an inability to recruit a full complement of physicians, which has negatively affected the companies’ ability to generate income through invoicing Manitoba Health and recovering on overhead. A&M was appointed monitor. Counsel is Taylor McCaffrey for the companies, McDougall Gauley for the monitor and MLT Aikins for CIBC.

By Dina Milivojevic

Nilex USA Inc. (“Nilex USA”)

Nilex USA Inc. (“Nilex USA”), a wholly-owned subsidiary of Nilex Inc., a Calgary-based construction company operating in the geosynthetics industry which is already subject to proposal proceedings, filed an NOI on November 24. Nilex USA operates from leased premises in Utah and Colorado and has approximately eight employees. In October 2021, Nilex Inc. engaged Valitas Capital Partners to conduct a sales process, which ultimately resulted in the acceptance of a bid for a going-concern sale of substantially all of the companies’ business and assets to Terrafix Geosynthetics Inc. (the Canadian purchaser) and Hanes Companies, Inc. (the US purchaser), The purpose of the Nilex USA NOI filing is to allow the transaction for the US assets to be completed, and the proposal trustee intends to work with US counsel to commence Chapter 15 recognition proceedings. KSV is the proposal trustee. Counsel is Blakes for Nilex USA, Cassels for the proposal trustee and Norton Rose for CIBC, the senior secured lender.

By Dina Milivojevic

Lightbox Enteprises Ltd. dba Dutch Love Cannabis

Lightbox Enteprises Ltd. dba Dutch Love Cannabis, a licensor and service provider with respect to the “Dutch Love” cannabis store brand, continued its NOI proceedings (which were commenced on November 1) under the CCAA on November 24. Like many other cannabis retailers, Lightbox was negatively impacted by the challenging business climate for cannabis retail operations and the COVID-19 pandemic, which had a significant impact on both the company’s sales and operations. In 2021, Lightbox retained Kronos Capital Partners Inc. and Canaccord Genuity Group Inc. to assist in selling assets to aid in its restructuring. Lightbox has negotiated three asset purchase agreements to sell to independent, third-party purchasers: (a) two unprofitable store locations in Kelowna and Lake Country; and (b) the assets related to a now closed store location in Saskatoon. Despite the pending sales, the company has been unable to restructure so as to be in a position to meet its obligations as they come due, or to broker a sale of its operations en bloc as a going concern. However, such efforts have attracted interest in a restructuring transaction from a number of prospective parties, and the company intends to run a SISP in the CCAA proceedings to maximize value for stakeholders. EY is the monitor. Counsel is McMillan for the company, Fasken for the monitor, McCarthy Tétrault for Sundial Growers, Lawson Lundell for BMO and Alpine Retail Center, Dentons for Roseterra Investments, Daoust Vukovich for Pensionfund Realty, MLT Aikins for LS Properties Meadows Market BT and Cannavore Cannabis, Koffman Kalef for Robson Promenade Holdings, Gowlings for Aquanta Group and Forthspace Cannabis and Crabtree Law for 1204393 B.C. Ltd.

By Dina Milivojevic

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Howard Steinberg on the growing pains of the cannabis industry

Canada’s cannabis industry is starting to experience growing pains. It is grappling with a lack of capital, a mismatch in supply and demand, and many of the other challenges that can be expected in a nascent industry.

Howard Steinberg, a seasoned executive and CRO focused on change management and who has been in the cannabis industry for many years, recently sat down with us to chat about market conditions and a recently completed restructuring in the space.