Cirque du Soleil

Cirque du Soleil, a Montreal, Quebec-based international live entertainment media company, obtained protection under the CCAA on June 30, listing approximately $1.6 billion (USD) in liabilities. Founded in 1984, the company is known for its circus performances, which it performs in custom-built, partner-hosted resident venues and through touring in different cities around the world. Over the past few years, the company has been responsible for the majority of the top 10 live shows in Las Vegas, accounting for almost half of the total Las Vegas box office sales. The company has seen its business operations severely impacted by the global COVID-19 pandemic, which has left the company with no other option but to call for an unprecedented halt in activity until the pandemic is controlled. Following the closure of all its shows worldwide, the company's revenue income entirely vanished and the company had no choice but to make significant temporary employee reductions to its nearly 5,000-person staff, impacting 95% of its workforce. Even before the pandemic struck, however, the company was already heavily indebted to its creditors following a series of major acquisitions. While the company hopes to be able to restart its operations as soon as possible, it is currently unable to generate any revenues, thereby preventing it from meeting its obligations as they become due. After carefully considering its options, the company made the difficult decision to terminate the employment of a majority of its employees, including the already laid-off employees. A group of existing investors, with backing from Investissement Québec, the Quebec government's investment wing, has tabled a bid to take over the company, inject $300.0 million (USD), and provide financial support for 3,500 laid-off employees. EY was appointed monitor. Counsel is Stikeman Elliott for the company, Fasken for the monitor, Norton Rose Fulbright for Investissement Québec, McMillan for RBC, the administrative agent for the first lien lenders, and Goodmans for an ad hoc group of first and second lien lenders.

GNC Holdings (NYSE:GNC)

GNC Holdings (NYSE:GNC), a Pittsburgh, Pennsylvania-based specialty retailer of health and wellness products, in its capacity as foreign representative, had its Chapter 11 proceedings recognized in Canada under the CCAA on June 29. Over the past two years, the company has entered into several transactions that it believes have contributed to an increased profitability and stability of its business. However, faced with the potential maturity of its secured debt obligations and a decline in sales and liquidity caused by the COVID-19 pandemic, the company had no option other than to commence Chapter 11 bankruptcy. Following weeks of extensive negotiations, the company was able to negotiate DIP financing and a pre-arranged standalone plan of reorganization with certain of their secured lenders. The company hopes that the overwhelming support of the company's creditors will enable it to quickly emerge from its insolvency proceeding. The company will continue operating, but will become a smaller company as it plans to close up to 20% of its 5,800 retail stores, including 29 stores in Canada. FTI was appointed information officer. Counsel is Torys for the company, Stikeman Elliott for the information officer, and Cassels for the DIP lenders.

GFA World

GFA World, a Hamilton, Ontario-based Christian non-profit organization that is focused on raising donations in Canada which can be used to fund charitable works in South Asia, obtained protection under the CCAA on June 26. The decline in donations, which comprises the organization's primary source of revenue, has been caused by the COVID-19 crisis as well as the negative publicity caused by various class action proceedings commenced against Gospel for Asia, another Christian charity related to GFA World. In 2017, a class action was commenced against Gospel for Asia alleging financial impropriety. Subsequently, donations to the organization declined by approximately 18%. In 2019, a settlement of the class action was approved, in which Gospel for Asia agreed to pay $37.0 million (USD) without any admission of wrongdoing. In February 2020, a new class action claiming $170.0 million was commenced in Nova Scotia against the organization and Gospel for Asia alleging fraudulent misrepresentation and improper use of donated funds. Without the protection of a CCAA proceeding, the organization's ability to attract donations and conduct its charitable works will be greatly diminished. PwC was appointed monitor. Goodmans is counsel to the company.

Northern Pulp Nova Scotia Corporation

Northern Pulp Nova Scotia Corporation, which owns a pulp mill in Abercrombie, Nova Scotia, along with its affiliates (collectively, the "Petitioners"), filed for protection under the CCAA on June 19 after the Petitioners were forced to cease business operations of their mill on January 31 and lay off over 300 employees. The mill closed following the Nova Scotia Premier's refusal to extend the life of the company's effluent treatment plant in Boat Harbour. As a consequence of the mill's closure and associated operational issues, the Petitioners face immediate and multiple challenges to their continued viability and project they will run out of cash in late July. Without CCAA protection, the Petitioners, which currently owe approximately $84.9 million to the Province of Nova Scotia, will be unable to transition the mill and their operations into a safe state of hibernation and preservation. EY was appointed monitor. Counsel is McCarthy Tétrault for the Petitioners and Stewart McKelvey for the Province of Nova Scotia.

Skillsoft Canada

Skillsoft Canada, as the foreign representative of Skillsoft, a US educational technology company which provides cloud-based learning solutions, had its Chapter 11 proceedings recognized in Canada under the CCAA on June 19. The primary purpose of the Chapter 11 proceedings is to implement a pre-negotiated, consensual restructuring that will reduce the company's existing balance sheet liabilities from $2.1 billion to $585.0 million. In recent years, the company has faced several challenges that have adversely impacted the operating performance of its business, including customer attrition resulting from steep market competition as well as the company's difficulty adapting its business model to address market shifts. In 2019, the company launched a successful transformation plan aimed at stabilizing the business. Despite increased order intake, customer renewal rates and new business, however, the company remains over-levered, with looming debt maturities in 2020 and 2021. Richter was appointed information officer. Counsel is Stikeman Elliott for the company, Fasken for the information officer, Osler for an ad hoc group of first lien and second lien lenders, and Goodmans for an ad hoc group of first lien lenders.

AllSaints USA

AllSaints USA, a subsidiary of AllSaints, a global contemporary fashion brand headquartered in London, England, had its UK restructuring proceedings recognized in Canada under the CCAA on June 17. The company attributes its financial troubles to the COVID-19 pandemic, which has had a significant impact on the company's immediate liquidity position. In complying with the global COVID-19 restrictions, AllSaints closed most of its international locations by the middle of March, including all six of the company's Canadian stores. As a result of the company's liquidity challenges and financial difficulties, it has not paid rent under its Canadian leases from March to June and owes approximately $526.5 thousand in rent obligations to its Canadian landlords. Without a restructuring of existing liabilities, the company's business will not be sustainable. PwC was appointed information officer. Counsel is Blakes for the company and Cassels for the information officer.

Cequence Energy Ltd. (TSX:CQE)

Cequence Energy Ltd. (TSX:CQE), a Calgary, Alberta-based company engaged in the acquisition, exploration, development, and production of petroleum and natural gas reserves in Western Canada — along with its subsidiaries — obtained protection under the CCAA on June 11, listing approximately $112.7 million in liabilities. The companies, which reported operating losses for the last five years, have a working capital deficiency of $10.3 million and a secured term loan outstanding of $50.0 million. They are currently in the midst of a liquidity crisis, primarily due to low commodity prices, declining production volumes, onerous contractual obligations, and significant debt. As a result of these factors and based on current cash balances, the companies will be unable to fund their financial commitments in 2020 absent a restructuring of their affairs. During the CCAA proceedings, the companies will be seeking up to $7.0 million in DIP financing from its second lien lenders. EY was appointed monitor. Counsel is Norton Rose Fulbright for the companies, BDP Law for CIBC, BLG for the second lien lenders, and McCarthy Tétrault for EY.

Beleave Inc. (CSE:BE, OTCQX:BLEVF)

Beleave Inc. (CSE:BE, OTCQX:BLEVF), a licensed producer and seller of cannabis and cannabis related products, along with certain affiliates (collectively, the "Beleave Group"), obtained protection under the CCAA on June 5, listing over $18.0 million in liabilities. The Beleave Group, which sells to five Canadian provinces, has experienced negative cash flow since its inception. In particular, it spent significant resources to construct and expand the processing capacity at its production facility in Hamilton, Ontario. Although the Beleave Group has pursued a number of strategic initiatives to improve its financial position, certain of these initiatives have been unsuccessful, including efforts to sell its cannabis licence. Unless CCAA proceedings are implemented, the Beleave Group will not be able to continue operating. The Beleave Group intends to commence a stalking horse sale process in order to sell its assets and operations for the benefit of its creditors and other stakeholders. Grant Thornton was appointed monitor. Counsel is Miller Thomson for the Beleave Group and Fasken for the monitor.

Peraso Technologies Inc.

Peraso Technologies Inc., a Toronto, Ontario-based semiconductor company specializing in the development of integrated circuits and chipsets for the new generation of wireless technology, obtained protection under the CCAA on June 3, listing approximately $6.7 million in liabilities to Roadmap Capital and $1.0 million to Polar Multi-Strategy Master Fund. The company is currently facing significant liquidity issues due to, among other things, multiple legal proceedings brought against it in Canada and the US by its largest customer, Ubiquiti Inc. As a result of these proceedings, the company was unable to sell its products to customers other than Ubiquiti, potential purchasers were deterred from acquiring the company, and the company could not obtain viable financing. The COVID-19 pandemic has further exacerbated the company's efforts to obtain financing or engage in a strategic transaction as the financial markets have become significantly more risk-averse. The company anticipates that it will run out of cash by late June, at which point it will be forced to cease operations. EY was appointed monitor. Canadian counsel is TGF for the monitor, Stikeman Elliott for the company, and Aird & Berlis for Ubiquiti Networks Canada Inc.

Comark Holdings Inc., Bootlegger Clothing Inc., cleo fashions Inc. and Ricki’s Fashions Inc. (collectively, the “Comark Group”)

Comark Holdings Inc., Bootlegger Clothing Inc., cleo fashions Inc. and Ricki's Fashions Inc. (collectively, the "Comark Group"), leading Canadian specialty apparel retailers with a nationally recognized portfolio of exclusive private label brands, obtained protection under the CCAA on June 3, owing approximately $26.4 million to CIBC. A combination of factors have resulted in a severe liquidity crisis for the Comark Group, including the COVID-19 pandemic, a difficult economic environment in Alberta arising from declining oil prices, and a worsening retail environment. Between March and May, the Comark Group lost over $50 million dollars in sales, and in its last fiscal year, it experienced a net operating loss of $7.6 million. Given these financial difficulties, the Comark Group has been unable to pay rent for its retail stores and, as such, has received notices of defaults from its landlords with respect to 56 stores. Without additional funding, the the Comark Group will have no available liquidity after June. Alvarez & Marsal was appointed monitor. Counsel is Osler for the Comark Group, Goodmans for the monitor and BLG for CIBC.

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