PharmHouse Inc., a licensed cannabis producer with an operating facility in Staples, Ontario, obtained protection under the CCAA on September 15, listing approximately $170.9 million in liabilities and $187.7 million in assets. Since August, the company has relied on $1.2 million in funding from Canopy Rivers Corporation ("Rivers") to meet its immediate cash needs. In order to establish its operating facility, increase its cannabis production capabilities, and grow its business, the company has expended significant resources to date, including funds from equity and debt financing. As a result, the company has now exhausted its cash on hand, including its $90.0 million non-revolving credit facility. Absent urgent additional funding and a restructuring of its business, the company will face an immediate cessation of its operations. Although Rivers has advised that it is no longer willing to provide the company with funding on an unsecured basis, it will be providing DIP financing during the CCAA proceedings. EY was appointed monitor. Counsel is Bennett Jones for the company, BLG for the monitor, and Cassels Brock for Rivers.
Mountain Equipment Co-operative (MEC), a Vancouver, British Columbia-based member-owned and directed retail consumer co-operative specializing in outdoor activity equipment and clothing, obtained protection under the CCAA on September 14, listing approximately $229.6 million in liabilities and $389.0 million in assets. MEC — which is a key Canadian retail partner with global outdoor brands including Patagonia, the North Face, Arc'teryx, Birkenstock, and Blundstone — currently operates 22 retail locations across Canada. While there was a considerable increase in online sales during March to September, MEC experienced a reduction in sales of $90 million compared to last year, and all MEC stores were closed as of March. The co-op is currently in the midst of a liquidity crisis, primarily due to difficult retail conditions which were exacerbated by the COVID-19 pandemic. As such, it was necessary for MEC to refinance, downsize operations, conduct a review of strategic alternatives, or conduct a potential sale of the MEC business. MEC's board of directors has unanimously approved a deal in which Kingswood Capital Management ("Kingswood"), a Los Angeles-based private investment firm, will acquire MEC's assets. MEC's transition from a co-operative structure to a subsidiary of Kingswood is required to ensure a stable future for the business. Alvarez & Marsal was appointed monitor. Counsel is Norton Rose Fulbright for MEC, Cassels Brock for the monitor, and Fasken for Kingswood.
Groupe Dynamite, a Montreal, Quebec-based fashion retailer that operates 322 retail stores under the brands Garage and Dynamite, obtained protection under the CCAA on September 8, listing approximately $357.0 million in liabilities and $192.0 million in assets. The company owes $149.4 million to a banking syndicate composed of National Bank of Canada, BMO, TD, and Fédération des caisses Desjardins du Québec. After record performances in 2019 and early 2020, the company was negatively affected by the ongoing pressures of COVID-19 store closures, social distancing measures, and closed borders resulting in a significant lack of tourism. Increases in digital sales since the beginning of the pandemic were not able to offset the massive impact of store closures, and the company's overall sales dropped by 50% compared to the same period in 2019. The company has unsuccessfully tried to renegotiate its store leases in order to limit its losses. During these CCAA proceedings, a numbered company will be providing up to $20.0 million in interim financing. Deloitte was appointed monitor. Counsel is McCarthy Tétrault for the company and Dentons for the National Bank of Canada.
Urthecast Corp. (TSX:UR), a Vancouver, British Columbia-based Big Data services company specializing in satellite imaging, data services, and geo-analytics, obtained protection under the CCAA on September 4, listing approximately $151.3 million in liabilities and $126.6 million in assets. The company is well-known for operating two cameras on the Russian segment of the International Space Station. Historically, the company has been able to manage its required ongoing financing by obtaining secured bridge financing from its current group of secured creditors. Lately, however, the company has needed extensive funding to execute on projects still in development. In addition, the company's regular financing requirements have been negatively impacted by the COVID-19 pandemic, which has affected sales, the collection of receivables, and delayed the company in achieving payment milestones in connection with engineering and services contracts. EY was appointed monitor. Bennett Jones is counsel to the company.
Ernest Enterprises, a privately-owned retail company selling men’s suits and leisure wear with 37 locations primarily in Quebec, obtained protection under the CCAA on September 4. The company, which currently owes approximately $3.0 million to HSBC and $2.0 million to BDC, mainly attributes its financial difficulties to the COVID-19 pandemic. Although the company was able to operate its online operations during the COVID-19 shutdowns, online sales have been insufficient to offset the lost revenue resulting from store closures. Demands of consumers have also changed due to work-from-home policies being implemented by many employers, as well as general financial uncertainty flowing from the crisis. In the context of very significant rental expenses and diminishing revenues resulting from the COVID-19 pandemic, it is anticipated that absent a restructuring under the CCAA, the company will face a looming liquidity crisis. HSBC has agreed to provide the company with interim financing during these CCAA proceedings. EY was appointed monitor. Counsel is Stikeman Elliott for the company, Norton Rose Fulbright for the monitor, Miller Thomson for BDC, and Davies for HSBC.
RGN-National Business Centers and other debtors-in-possession (collectively, the "Chapter 11 Debtors") obtained protection under the CCAA on August 31. The Chapter 11 Debtors are subsidiaries of Regus Corporation, which together with its affiliates (collectively, "IWG"), offer a network of on-demand office and co-working spaces in over 1,000 locations in the US and Canada. The Chapter 11 Debtors currently owe approximately $433.0 million to Regus Corporation. IWG, which operates 137 centres in Canada, has been severely impacted by the COVID-19 pandemic. The principal purpose of the CCAA proceedings is to prevent certain Canadian leases from being terminated while the company and Chapter 11 Debtors develop a plan to restructure the global business of Regus Corporation and its affiliates. KSV was appointed monitor. Canadian counsel is Stikeman Elliott for the company and Bennett Jones for the monitor.
RGN-National Business Centers was declared a foreign representative of itself and six other debtors-in-possession (collectively, the "Chapter 11 Debtors") under the CCAA on August 24. The Chapter 11 Debtors are subsidiaries of Regus Corporation, which together with its affiliates (collectively, "IWG"), offer a network of on-demand office and co-working spaces in over 1,000 locations in the US and Canada. The Chapter 11 Debtors currently owe approximately $433.0 million to Regus Corporation. IWG, which operates 137 centres in Canada, has been severely impacted by the COVID-19 pandemic. The occupancy rates at its office spaces are significantly reduced and certain clients have had difficulty making payments under their occupancy agreements. To mitigate the effects of the pandemic, IWG has taken various cash flow and liquidity measures, including the deferral of rent payments and engagement with landlords to negotiate forbearances. If these Chapter 11 restructuring efforts prove unsuccessful, the company will have to wind down the operation of applicable centres. KSV was appointed information officer. Canadian counsel is Stikeman Elliott for the company and Bennett Jones for the information officer.
Moores, a Canadian company specializing in business clothing and formalwear for men, was declared a foreign representative under the CCAA on August 5 in respect of the US Chapter 11 proceedings commenced by Tailored Brands, Inc., which operates over 1,200 American stores under the retail brands Men’s Warehouse, Jos. A. Banks, and K&G Fashion Superstore. Moores, which operates 125 retail stores in Canada, incurred losses of $22.8 million over the last five months, and currently has insufficient assets to satisfy its liabilities. Both proceedings are needed in order for the companies to continue reshaping product offerings and mix their omni-channel offerings, while dealing with the impact of COVID-19. The Chapter 11 debtors have continued the process of exiting unprofitable stores and analyzing optimal markets in which to maintain a physical presence moving forward. Grant Thornton was appointed information officer. Counsel is Stikeman Elliott for the company and McCarthy Tétrault for the information officer.
Laura's Shoppe Inc., a Montreal, Quebec-based clothing retailer with 140 stores across Canada operating under the trade names Laura and Melanie Lyne, obtained protection under the CCAA on July 31, owing approximately $18.1 million to BMO and $13.4 million to its landlords. Founded in 1930, the company attributes its current financial difficulties to the detrimental impact the COVID-19 pandemic has had on the retail business. In July 2015, the company had filed an NOI as a result of issues it was facing with its then-lender, Salus Capital Partners. The NOI proceedings were later continued under the CCAA. The company emerged from its restructuring proceedings as a stronger business and was able to successfully operate in the rapidly-changing retail landscape until very recently, when its operations were blindsided by the unprecedented and unforeseeable pandemic. Although the company has been able to operate its online business in recent months, the online sales have been insufficient to offset the lost revenue resulting from store closures. KMPG was appointed monitor. Counsel is Fishman Flanz Meland Paquin for the company, Stikeman Elliott for the monitor, and Dentons for BMO.
Stokes Inc., a Montreal, Quebec-based leading tableware, kitchenware, and home décor retailer with 147 stores across Canada, had its NOI proceedings continued under the CCAA on July 27. The company owes approximately $11.4 million in liabilities, including $2.5 million (USD) to Scotiabank. Founded in 1935, the company attributes its financial difficulties to adverse macro-trends such as changing consumer preferences, expensive leases, and a general shift away from brick-and-mortar to online retail channels. In addition, increased competition from discount and online retailers has exerted significant downward pressure on pricing and margins. Due to the COVID-19 pandemic, the company requires additional time to complete a liquidation sale for its stores and formulate a proposal for creditors. However, it has become evident that the company will not be able to do so before the expiry of the 6-month period following the filing of the NOI. Richter was appointed monitor. Counsel is Osler for the company, Stikeman Elliott for the monitor, and Kugler Kandestin for Scotiabank.