Celadon Group, a significant American truckload shipping company, had its US Chapter 11 bankruptcy recognized in Canada on January 23 and a receiver was appointed to oversee the liquidation of the assets of Celadon Group's sole Canadian business, Hyndman Transport. On December 9, 2019, Celadon Group and its 25 subsidiaries (collectively, the "Chapter 11 Debtors") filed for Chapter 11 bankruptcy protection and ceased operations. During the summer of 2019, the decline in overall freight tonnage and excessive truck capacity led to a significant decline in freight rates and a corresponding decline in the Chapter 11 Debtors' liquidity. The Chapter 11 Debtors' principal secured creditors include MidCap Financial Trust, Blue Torch Finance, and Luminus Energy Partners Master Fund. Upon discontinuation of its business, Hyndman terminated nearly all of its workforce and purportedly owes former employees approximately $2.3 million. The appointment of a receiver will allow these employees to claim and receive statutory payments, including for unpaid wages and termination pay. Blue Torch Finance will be providing DIP financing during these proceedings. KSV Advisory was appointed receiver. Counsel is DLA Piper for the Chapter 11 Debtors and Celadon Group (as the foreign representative), Bennett Jones for the receiver, McMillan for Blue Torch Finance, Norton Rose Fulbright for MidCap Financial Trust, and Koskie Minsky for 200 former Hyndman employees.
Medlantis, a Toronto, Ontario-based company that was incorporated by Dr. Kieran Murphy to acquire an online medical education platform originally developed and operated by the University Health Network, filed for bankruptcy on January 22, listing $5.1 million in liabilities, including $2.4 million to Dr. Helmut Schuehsler and $1.3 million to Dr. Murphy. The company's technology allows for data mining of thousands of hours of medical lectures, cases, procedures, workshops, and demonstrations, designed to make expert clinical answers accessible to everyone, everywhere, fast. Despite its promising potential, the company struggled to generate subscription revenues and over time began to fall in arrears with its suppliers. After attempts to raise additional capital proved unsuccessful, the company filed an assignment in bankruptcy. Link & Associates is the bankruptcy trustee.
Thomas Sabo Ltd./Ltee., a jewellery retailer, filed an assignment in bankruptcy on January 21, 2020. The purpose of the filing was to complete the restructuring of the Canadian operations from bricks and mortar to an e-commerce business model. With 11 remaining physical locations across Canada, after voluntarily closing other locations in the past, and employing approximately 80 employees, the company had been experiencing declining revenue and losses from most of its mall locations. Grant Thornton is the bankruptcy trustee. Dale and Lessmann LLP is counsel for the company.
Campus Vibe, a Mississauga, Ontario-based student event organization and management platform, filed for bankruptcy on January 17, listing $109.5 thousand in liabilities. Farber is the bankruptcy trustee.
CLM Distribution Pool & Spa Products and Lectranator Systems, Calgary, Alberta-based pool and spa products distributors, filed for bankruptcy on January 10, respectively listing $3.5 million and $925.1 thousand in liabilities. Grant Thornton is the bankruptcy trustee.
Gestion Knighstbridge, a Montreal, Quebec-based residential real estate developer, was deemed bankrupt on January 9, listing $2.9 million in liabilities, including $373.6 thousand to RBC. The company had previously filed an NOI on November 15. The company attributes its financial difficulties to numerous factors that negatively impacted its cash flow, including delays in obtaining approvals from municipal authorities which postponed the launch of ongoing projects; an increase in construction costs and shortage of skilled labour; and cost overruns on certain projects. Richter is the bankruptcy trustee.
Gozco, a Calgary, Alberta-based investment firm, filed for bankruptcy in March 2018. PwC was appointed trustee. George Gosbee, who passed away in November 2017, was the company's sole director, officer, and shareholder. Karen Gosbee, his spouse, is the personal representative of Mr. Gosbee's estate. On January 7, PwC filed an application for an order declaring, amongst other things, that certain transactions granted by the company in favour of BNS (collectively, the "BNS Transaction") constitute a transfer at undervalue and are void as against the trustee. Bowfort, the company's primary creditor, had provided to the company a loan of USD $5.0 million secured by a promissory note dated January 2014. This loan was advanced to the company to assist in funding its USD $7.5 million investment in a US business venture. The company did not make any repayments of the loan to Bowfort other than certain baseline annual interest payments. On August 10, 2017, the Gosbees entered into a commitment letter with BNS to open a private and personal overdraft lending account. At their direction, the company completed a series of transfers whereby USD $750.0 thousand belonging to the company was transferred into this personal account, to the detriment of the company's creditors. At the time the BNS Transaction was completed, the company was insolvent. It is alleged that there was no valid business purpose for the company entering the BNS Transaction, and by doing so, it breached its obligation to Bowfort. PwC alleges that the BNS Transaction was intended to defraud, delay, or hinder the company's creditors. Bennett Jones is counsel to the applicant.
Dion Global Solutions (Canada), the Canadian branch of a global financial technology company based in India, filed for bankruptcy on December 30, listing $4.5 million in liabilities, including $3.2 million to FTI Consulting Hong Kong and $1.3 million to FTI Consulting Singapore. Farber is the bankruptcy trustee.
Norcon, a Clarenville, Newfoundland and Labrador-based marine transportation company that operates passenger/freight and cargo ships, was deemed bankrupt on December 25. The company, which owes BDC over $1.4 million, has been negatively affected by the loss of government contracts of ferry services, the general downturn in the aquaculture business, and the need to write off a large debt from a related company. The company had previously filed an NOI on November 25 and subsequently attempted to transition its proposal proceedings into CCAA proceedings but was unsuccessful. BDC's application for a court-appointed receiver was also dismissed and it therefore turned to a privately appointed receiver to realize on its security. Deloitte is the bankruptcy trustee. Grant Thornton is the private receiver. Counsel is Boyneclarke for the company, Cox & Palmer for BDC, McInnes Cooper for the trustee, and Stewart McKelvey for BNS.
Richard Pelletier Holdings, a holding company related to one of the sellers of Pacer Construction, was ordered bankrupt on November 26 on application by Pacer Construction Holdings, a holding company related to the purchaser of Pacer Construction. Pacer Construction was sold in 2014, with the sellers receiving approximately $135.3 million in cash. Following the closing of the sale transaction, it was alleged that Mr. Pelletier falsely represented the financial condition of Pacer. Mr. Pelletier denied the allegations and the matter went to arbitration. In 2019, an arbitral tribunal found the sellers liable to the purchaser for over $60.0 million plus interest and costs. The other sellers, excluding Mr. Pelletier and Richard Pelletier Holdings, have paid their portions of the awards. In July 2019, Mr Pelletier made a declaration that his holding company had no assets whatsoever. The applicant alleges that this is because a scheme was set out to divest the assets to related entities.The awards were converted into a judgment in August 2019 and the purchaser pursued a bankruptcy order on the basis that acts of bankruptcy were committed in the last six months. Grant Thornton is the bankruptcy trustee. JSS Barristers and MLT Aikins are counsel for the applicant.