SM Group, a Montreal, Quebec-based group of construction and engineering companies, obtained protection under the CCAA on August 24. Founded in 1972, the company has grown to employ over 1,100 workers and operates in over 35 countries. In recent years, however, it has suffered significant losses, due largely to several unprofitable contracts. In July 2017, the company engaged Deloitte as a financial advisor. On several occasions, Deloitte recommended that the company should, in light of its financial situation and liquidity issues, enter into an operational and financial restructuring. These recommendations were ignored by the company, which was more focused on the long-term perspective of total revenues vs. the profitability of contracts and its short-term critical issues. On August 22, 2018, Deloitte was made aware that the company was filing a motion to initiate proceedings under the CCAA, Despite its role with the company, Deloitte was never consulted with respect to the proposed CCAA restructuring plan. PwC was proposed to be the monitor. The company's main secured lenders, Alaris Royalty (“Alaris”) and Integrated Private Debt Fund V (“IPDF”), respectively owed $93.7MM and $25.8MM, were also not consulted. Alaris and IPDF (the "Applicants") immediately filed a joint application seeking the establishment of an alternative restructuring plan under the CCAA, arguing that the company's filing was in direct violation of the company's contractual obligations and was not made in good faith. The Applicants further allege that the company's proposed restructuring does not benefit the company's most important stakeholders but appears solely to serve the interests of the company's largest shareholder and former president, Bernard Poulin, who, according to the company, was removed from management following allegations of corruption. The court granted the Applicants their requested initial order and Deloitte was appointed monitor. LGBM was appointed Chief Restructuring Officer for the company. Counsel is McCarthy Tétrault for Alaris, Miller Thomson for IPDF, Blakes for the company and Stikeman Elliott for Deloitte. Integrated Asset Management is providing interim financing during the proceedings.
Aralez Pharmaceuticals (TSX:ARZ), a global pharmaceutical company based in Mississauga, Ontario, obtained protection under the CCAA on August 10. In connection with these proceedings, the company's subsidiaries in the US and Ireland also filed for Chapter 11 bankruptcy protection. Operating in a highly competitive industry dominated by a small number of global giants, Aralez focused on acquiring, developing and commercializing products primarily in cardiovascular disease and other specialty areas. The company incurred significant losses in recent years due, in large part, to significant costs incurred to launch sales of two new products in the US, both of which failed to reach anticipated levels of commercial success. In 2017, the company lost $125.2MM. The losses were funded partially by debt, which the company can no longer service. Following a strategic review undertaken by the company's board, the decision was made to run a sale process for the company's business and assets under court supervision. The company intends to enter into purchase agreements with two separate stalking-horse purchasers to sell its main operating businesses. One of the stalking-horse purchasers is its secured lender, Deerfield, who will also be providing DIP financing during the restructuring proceedings. Richter was appointed monitor. Alvarez & Marsal was appointed financial advisor. Canadian counsel is Stikeman Elliott for the company, Torys for the monitor, Bennett Jones for Deerfield and Goodmans for Nuvo Pharmaceuticals (the other proposed stalking horse purchaser).
The OpsMobil Group, a Calgary, Alberta-based group of oilfield service companies that provides energy, aviation and construction services, filed for protection under the CCAA on July 10. Although the OpsMobil Group's primary assets are aircraft and aircraft support facilities, it has been focused on transitioning to value added services through its asset management solutions. By nature of its business, the OpsMobil Group's revenues are dependent on the expenditures of oil and gas producers, which have been depressed since 2014. In 2015, Third Eye Capital purchased the $5.3MM debt owed by OpsMobil to BMO for $3.8MM. After paying its own legal fees in addition to Third Eye and BMO's legal fees, OpsMobil was only left with $42.0M to prepare an aircraft fleet for the 2016 season, which was grossly inadequate. OpsMobil was able to negotiate and enter into a payment plan with the CRA for amounts owing at the time; however, it eventually missed the third payment and discovered that its line of credit had been restricted due to a lower than expected borrowing base calculation. As a result of the missed payment, CRA issued an enhanced garnishment of OpsMobil's revenue and accounts. Throughout early 2016, OpsMobil was continuously deprived of funds that were required for its daily operations due to its borrowing base restrictions and CRA's garnishment. By late June 2018, the group was served with a receivership application by Third Eye, which led to it filing for protection under the CCAA. During these proceedings, the OpsMobil Group will receive $1.4MM in interim financing from Third Eye. EY was appointed monitor. Gowling WLG is counsel to the OpsMobil Group.
Kolsy Homes, a Saskatoon, Saskatchewan-based company that acquires and develops lands in Saskatchewan, along with Rivairo Capital Corporation, a related company, filed for protection under the CCAA on July 9. The sole asset of Rivairo is 5.4 acres of land in Airdrie, Alberta that has been subdivided out for the development of townhomes and condos (the "Rivairo Project"). Based on Rivairo's aggregate secured indebtedness of $9.4MM, the current value of the Rivairo Project, if sold in a forced-liquidation scenario, would be insufficient to pay all of the company's secured obligations that are due and owing. Moreover, the company currently does not have enough funds to pay any amount of the $3.6MM it owes to unsecured creditors. Similarly for Kolsy, the aggregate value of its assets - which is approximately $3.3MM - would be insufficient to pay its secured obligations as they become due. The only income that Kolsy receives is $7,600 in annual rent on the 143.6 acres of land that it owns in Corman Park. During the CCAA proceedings, KV Capital will be providing $600.0M in interim financing. Counsel is The W Law Group for the companies, MLT Aikins for The Bowra Group and Bishop & McKenzie for KV Capital.
TELoIP, a Mississauga, Ontario-based technology company that principally develops and sells products that simplify cloud access through software-defined networks, filed for protection under the CCAA on June 27, listing approximately $36.6MM in liabilities. The company has been significantly impacted by the direction of telecommunications developments in the industry and its competitors' technologic advances. As a result, the company has been unable to achieve profitability and has relied on a succession of debt and capital financings to fund its operating losses while it continues to work towards the profitable commercialization of its technology. These financial difficulties placed the company at a competitive disadvantage and meant it has effectively been operating under increasing financial distress for many years. Accordingly, the company is now facing a liquidity crises and cannot meet obligations as they become due. Under the protection of the CCAA, the company is planning a restructuring and refinancing transaction that will see $36.4MM of secured debentures converted to equity or extinguished. Adarsan Holdings Limited and Dicot Holdings Ltd. are providing $1.5MM in DIP financing to ensure that the company has sufficient funds during the CCAA proceedings to effect the recapitalization. PwC was appointed monitor. Counsel is TGF for the company, and Goldman Sloan Nash & Haber for the monitor.
Purcell Basin Minerals, Bul River Mineral Corporation, Gallowai Metal Mining, Grand Mineral Corporation and Stanfield Mining Group, Cranbrook, British Columbia-based developers of mineral resources and a mining property near the Rocky Mountains, filed for protection under the CCAA on May 29. Purcell had acquired the mine and the other petitioners in 2014 by way of a court-sanctioned plan of arrangement in the Stanfield CCAA proceedings. A year later, Brendan MacMillan, who was the sole director and officer of Purcell at that time, took some steps to further the development of the mine. However, he also caused the company to, among other things, secure his claimed compensation and issue three million shares to him. In 2016, two of Purcell's shareholders successfully challenged these transactions as being oppressive. Since the implementation of the Stanfield plan of arrangement, Purcell's business has been hampered by the oppressive actions of MacMillan and by litigation involving Purcell, its lenders and its shareholders. The company currently has no cash on hand, no income and no inflow of equity capital. The company will use the CCAA proceedings to, among other things, conduct a claims process to determine the validity and status of all creditors' claims, restructure its secured debt and seek new capital. MNP was appointed monitor. Counsel is Gowling WLG for the companies and Lawson Lundell for the monitor.
BioAmber Sarnia and BioAmber Canada, the subsidiaries of BioAmber (TSX:BIOA), a Montreal, Quebec-based sustainable chemicals company, filed for protection under the CCAA on May 24, having previously filed NOIs on May 4. The company has listed $63.2MM in liabilities, including $10.0MM to BDC Capital and $10.0MM to Comerica Bank, Export Development Canada and Farm Credit Canada, collectively. PwC was appointed monitor. Counsel is Blakes for the companies, BLG for the monitor, TGF and Lavery for BDC Capital and McMillan for Comerica Bank.
Wicker Emporium, a Halifax, Nova Scotia-based importer and retailer of solid wood furniture and home decor, filed for protection under the CCAA on April 18, listing over $5.0MM in liabilities, including $865.0M to Accord Financial. The founder, Madan Kapahi, opened the first Wicker Emporium in 1972 to so that he could share treasures from his home country of India with his new friends in Nova Scotia. The company now operates 23 "brick-and-mortar" stores in Atlantic Canada and Ontario, as well as an online store. Due to changes in sale patterns in different locations, however, the company has experienced a recent decrease in profits from sales, particularly at stores located in more rural areas. As a result, the company has experienced difficulty in paying its suppliers, many of which are furniture manufacturers based in Asia. MNP was appointed monitor. Burchells is counsel to the company.
Discovery Air, a specialty aviation services company operating through its subsidiaries across Canada and in select locations internationally, filed for protection under the CCAA on March 21, owing approximately $73.0MM to its largest secured creditor, Clairvest Group, and $14.0MM to CIBC. With over 140 aircrafts, the company is one of the largest air operators in Canada, employing more than 850 flight crew, maintainers and support staff to deliver a variety of air transport, maintenance and logistics solutions to its government, airline and business clients. The principal purpose of the CCAA proceedings is to allow the company to conduct a court-supervised sale process of the equity interest in its wholly-owned operating subsidiaries and residual interest in its former defence business. None of the subsidiaries have filed for CCAA protection, but each has the benefit of a stay of proceedings to prevent creditor actions against them. All of the subsidiaries will continue operating during the proceedings, and obligations to employees and suppliers of goods and services will continue to be met in the ordinary course. Clairvest will be providing up to $12.6MM in DIP financing. KSV Advisory was appointed monitor and will be leading the sale process. Counsel are Goldman Sloan Nash & Haber LLP (GSNH) for the company, Davies for CIBC, Goodmans for the monitor and Torys for Clairvest.
Spareparts, a Saskatoon, Saskatchewan-based leading retailer of sunglasses, watches and accessories, filed for protection under the CCAA on October 31, after two of its companies filed NOIs on October 2 and 3. The company has suffered from the overall decline in the North American retail marketplace, exacerbated by the severe economic downturn in Alberta where several of the company's retail locations are located. Currently, the company has over $5.0MM in liabilities, owing approximately $3.9MM to RBC. KPMG was appointed monitor. McCarthy Tétrault is counsel to the company.