Invictus MD Strategies (TSX-V: GENE), a Vancouver, British Columbia-based cannabis company, along with certain other related companies, obtained protection under the CCAA on February 13. Several factors contributed to the company's liquidity issues. First, it was unsuccessful in obtaining additional financing to complete a custom-built cultivation facility. Second, the strains of cannabis that are currently being harvested by Acreage - the company's primary operating entity - are not in demand as they do not have sufficient potency. While Acreage is currently in the process of changing over its plants to those with a higher level of potency, these plants will not be ready to harvest until mid-April 2020. Finally, the company's revenues have decreased due, in part, to lower consumer demand and market saturation. The company currently owes approximately $10.6 million to ATB Financial and $5.3 million to Authentic Brands, a New York-based brand management company. PwC was appointed monitor. Counsel is Cassels for the company, BLG for the monitor and Blakes for ATB.
1034179 B.C. Ltd., a British Columbia-based developer of a 66-unit rental property in Maple Ridge, British Columbia, obtained protection under the CCAA on February 4, listing approximately $22.0 million in liabilities, including $6.3 million to Canadian Western Bank. In April 2017, the company purchased the Maple Ridge property and began development with $3.8 million of purchase financing from its subordinate lenders. It was contemplated that construction would finish at the end of June 2018. By the fall of 2017, however, the company realized that construction was taking longer and costing more than initially anticipated. In the beginning of 2018, the company managed to secure an additional loan from its subordinate lenders as well as from CWB in order to complete construction of the property. Shortly after these financings, it became clear that the company could not complete construction or meet the monthly interest payments under its loan agreement with the subordinate lenders. In September 2019, CWB ceased to advance funds to the company and demanded payment for $6.3 million. The company proposed to CWB that it would seek relief under the CCAA so that interim financing could be obtained to complete construction of the development for the benefit of all stakeholders. The Bowra Group was appointed monitor. Fasken is counsel to the company.
Rebuts Solides Canadiens, a Montreal, Quebec-based waste disposal company, along with certain other related companies, obtained protection under the CCAA on February 3, attributing its liquidity issues primarily to the decline in the recyclable materials industry. In particular, as a result of China's new recycling ban, the value of recycled materials has dropped dramatically in recent years. The price per ton of mixed paper fell from $121 in mid-2017 to $34 in November 2019. The Quebec government has authorized a $7.0 million loan to the company. The Ministry of Sustainable Development, Environment, and Fight Against Climate Change will provide $5.0 million, while RECYC-QUÉBEC will provide the remainder of the loan. PwC was appointed monitor. Fasken is counsel to the company.
SFP Canada, a Mississauga, Ontario-based company that operates 76 retail stores across Canada under the Papyrus, Carlton Cards, and Paper Destiny brand names, filed for protection under the CCAA on January 23, listing approximately $11.8 million in liabilities. The company is owned by Schurman Fine Papers ("SFP", and together with SFP Canada, the "Schurman Group"), the leading privately held American retailer of personal expression products in North America. American Greetings Corporation previously supplied the majority of products sold by the Schurman Group. In the past few years, the Schurman Group has faced various liquidity pressures caused by, amongst other things, the general downturn in the brick-and-mortar retail industry; the decline in the value of the Canadian dollar since 2009; and a significant price increase in American Greetings' products. As a result of these financial challenges, the Schurman Group fell behind on payments to American Greetings, and American Greetings terminated their agreements in December 2019. The Schurman Group can no longer operate as a going concern. On January 22, SFP filed for Chapter 11 bankruptcy in the US. Similarly, SFP Canada cannot continue operating without the full support of its US affiliates, on whom the company is entirely dependent. Richter was appointed monitor. Canadian counsel is Osler for SFP Canada, Stikeman Elliott for the monitor, and Blakes for American Greetings.
Quest University Canada, a Squamish, British Columbia-based private, not-for-profit post-secondary institution, filed for protection under the CCAA on January 16, listing approximately $47.5 million in liabilities, including $16.0 million to Vanchorverve Foundation. Since the university commenced operations in 2007, it has not generated sufficient revenue to cover operating costs and the carrying costs associated with legacy debts incurred in its start-up. As such, the university requires CCAA protection to provide students with the opportunity to complete the academic year, while creating economic stability for the university's coming years. On January 27, the court approved the university's request for an extension of the stay of proceedings to May 29. The university also secured a $5.0 million loan from RCM Capital Management. Vanchorverve, the university's largest secured lender, had wanted the university to obtain the $5.0 million loan from Burley Capital and had unsuccessfully requested that the court replace four of the university's board members with appointees chosen by Vanchorverve. PwC, which was appointed monitor, advised that given the history between Vanchorverve's manager, Blake Bromley, and the university, interim financing should be provided by a third party lender. Counsel is Dentons for the university, McMillan for the monitor, and Murphy & Company and McCarthy Tétrault for Vanchorverve.
Morris Group of Companies, which consists of four Saskatchewan-based companies and an American branch in the business of manufacturing and distributing farm equipment, filed for protection under the CCAA on January 8, listing approximately $4.4 million in liabilities, including $2.1 million to De Lage Landen and $1.9 million to Kubota Canada. Morris Industries is the primary operating company and manufactures air carts, drills, seeders, and bale carriers. In recent years, the Morris Group has incurred significant losses due to several factors: the introduction of a new product line that experienced warranty issues which required a significant capital investment beyond foreseeable estimates; the Group's increased costs were accompanied by decreasing sales; and, as a result of declining financial results, the Group lost access to a factoring facility that had previously provided for the early payment of a substantial portion of its accounts receivable. Currently, each of the companies is unable to meet its obligations as they become due and is facing an imminent liquidity crisis. On January 16, the court granted the Group a stay of proceedings until March 27. BMO will be providing interim financing to the Group during the CCAA proceedings. Alvarez Marsal was appointed monitor. Counsel is McDougall Gauley for the Group, Burnet, Duckworth & Palmer for BMO, MLT Aikins for Alvarez & Marsal, Cassels Brock for De Lage Landen, and Miller Thomson for Kubota Canada.
Nemaska Lithium (TSX: NMX), a Montreal, Quebec-based minerals mining company, obtained protection under the CCAA on December 23. The company is is in the process of developing a mine in the James Bay Region of Quebec that it hopes will enable it to become one of thew world's most significant lithium salts producer and supplier to the emerging lithium battery market. To date, over $616.0 million has been spent on construction and engineering costs, funded by a combination of debt and equity from government and private sources, including Softbank. In February 2019 it was determined that additional funds of approximately $375.0 million were required to complete construction of the mine and processing plant. Significant efforts were undertaken to find investors, buyers or partners but to date no binding agreements have been reached. Despite a strong long-term outlook for lithium, prices have recently plummeted as a result of increased supply, primarily from Australia, where producers have lower extraction costs and are in closer proximity to the Chinese markets. The mine is currently in a care and maintenance program as the company seeks to conserve cash while it evaluates its restructuring options. PwC is the monitor. Counsel is McCarthy Tétrault for the company, Goodmans and Woods for Nordic Trustee AS, Miller Thomson for Bird Civil & Mines, Torys for OMF Fund II (N) Ltd., Dentons for Chubb Insurance, Norton Rose Fulbright for Investissement Québec and Lavery for Allied World Specialty Insurance
Lydian International (TSX: LYD), a Toronto, Ontario-based gold exploration and development company focused on construction of a gold mine in south-central Armenia, obtained protection under the CCAA on December 23. The company obtained an exploration license in 2006 and since then has invested more than $400.0 million in the project. The mine was 75% complete in May 2018 when a new prime minster came to power in Armenia. After the change in government, demonstrations and road blockades occurred sporadically throughout Armenia, including at the company's project. In addition to the blockades, additional audits and investigations have been imposed on the company, and a material water supply agreement was unilaterally terminated. As a result of these external factors, the company has dismissed more than 90% of its workforce and terminated substantially all of its supply relationships. The group has also defaulted on substantially all of its obligations to its lenders. Since October 2018, the company has entered into multiple forbearance agreements with its lenders, the most recent of which expired on December 20. 2019. While under creditor protection, the company will continue discussions with stakeholders in an attempt to restart construction. It will simultaneously canvas the market for parties interested in funding either the project or the company's potential international arbitration proceedings against the Armenian government. Edward Sellers of Black Swan Advisors is the company's interim president and CEO. Alvarez & Marsal is the monitor. Counsel is Stikeman Elliott for the company, TGF for the monitor, Blakes for Resource Capital Fund VI L.P., Norton Rose Fulbright for OSISKO Bermuda Limited, Torys for ORION Capital Management and DLA Piper for ING Bank N.V./ ABS Svensk Exportkrerdit (publ).
Fortress Global Enterprises (TSX: FGE), a Montreal, Quebec-based company engaged in the dissolving pulp business and the renewable energy generation sector, obtained protection under the CCAA on December 16. Previously known as Fortress Paper, the company changed its name in 2018 to reflect its intention to shift away from traditional pulp and paper operations and pursue opportunities in new business segments. The majority of the company's revenues is now derived from the production and sale of dissolving pulp, a product with a variety of commercial applications, including the production of rayon textile fibres. The market for dissolving pulp, however, has not been favourable for the company, with prices dropping from almost $950 USD per ton in 2017 to $640 USD per ton this year. Other factors have also contributed to the company's financial difficulties, including the recent Sino-American economic conflict which is disrupting markets and the garment sector which Fortress serves. In the past three years, the company has lost approximately $246.6 million. In consultation with its senior secured lenders, the company launched a sale and investment solicitation process in August 2019 with the assistance of Houlihan Lokey but to date has failed to receive any indications of interest. With no liquidity to operate in the normal course, the company's senior secured lenders, Investissement Québec (IQ) and Fiera, made an application on the company's behalf for creditor protection. While under creditor protection, it is anticipated that the company's pulp mill will be indefinitely idled while the company waits for market conditions to improve. Concurrently, the company will explore other ways to return to profitability, including potentially modernizing and upgrading its current facilities with the assistance of a new investor. Deloitte is the monitor. Counsel is BCF for the company, McCarthy Tétrault for the monitor, Stikeman Elliott for IQ, Miller Thomson for Fiera, Blakes for International Forest Products and Goodmans for Computershare.
IEC Ltd., Audeamus Capital Corp. and certain other entities related to the Strategic Group, one of Calgary, Alberta's largest real estate companies, obtained protection under the CCAA on December 10. The company has attributed its financial difficulties to the extended slump in the Canadian energy market. Vacancy rates in commercial office space in Calgary have soared since 2015 due to companies ceasing operations, engaging in headcount reductions and undertaking cost cutting measures. These vacancies have been compounded in the last two years by a large amount of new office space being added to the Calgary market, as well as increases in the property taxes being charged by the city. To put things in perspective, Calgary's downtown office vacancy rate is estimated to be 24.6% vs. Toronto's 2.2%. These changing market conditions have reduced the company's revenues and materially reduced the market value of many of its rental assets. Believing that there is no macro-economic turnaround on the horizon, the company sought creditor protection and intends to restructure its rental portfolio. Hardie & Kelly is the monitor. Neil Narfason was appointed CRO. Counsel is McCarthy Tétrault for the company and Norton Rose Fulbright for the monitor.