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.
DAVIDsTEA (NASDAQ:DTEA), a Montreal, Quebec-based leading Canadian speciality tea and tea accessory retailer, obtained protection under the CCAA and had its Chapter 15 bankruptcy recognized in Canada on July 8. Currently, the company owes approximately $21.0 million for various trade and other payables, $7.2 million to its Canadian landlords, and $6.7 million in gift card commitments. Over the last three years, the company has suffered a $28.0 million decline in sales and incurred a combined net loss of $93.0 million. Several factors contributed to the company's financial difficulties, including the US stores under-performing, the minimum wage increase across several Canadian jurisdictions where the company operates, and the high cost of rent for the company's stores. Although the company implemented a series of operational turnaround initiatives, they were insufficient to offset ongoing decline in sales suffered over the last several months. Without the ordinary revenue stream from brick-and-mortar stores as a result of the COVID-19 pandemic, the company's online sales and wholesale transactions alone are insufficient to enable the company to meet its outstanding liabilities as they become due. Absent a CCAA proceeding, the company faces a looming liquidity crisis. The company intends to close 82 of its Canadian stores and all 42 of its American stores. PwC was appointed monitor. Counsel is Fasken for the company and Stikeman Elliott for the monitor.
Simard-Beaudry Construction Inc. ("SBC") and Louisbourg Constructions Ltd. ("LC"), two large Laval, Quebec-based construction companies controlled by Antonio Accurso, obtained protection under the CCAA on July 8, respectively listing approximately $182.6 million and $82.8 million in liabilities. In 2010, the companies plead guilty to tax evasion against the CRA and were prohibited from bidding on public contracts until 2015. As a result, the companies' turnover dropped significantly and certain of their monetary assets were used to satisfy the numerous lawsuits launched against them. In recent years, the companies have ceased operations and sold almost all of their assets. In January, the companies filed an NOI, giving them until July 9 at the latest to file a proposal. However, various delays which were exacerbated by the COVID-19 pandemic eventually led the companies to file for protection under the CCAA. Raymond Chabot was appointed monitor. Ravinsky, Ryan, Lemoine is counsel to the companies.
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.
Northern Silica Corporation, a Calgary, Alberta-based company operating an integrated silica mining and transport business, along with several related companies (collectively, the "NSC Companies"), obtained protection under the CCAA on June 30 on application by QMetco Limited and Taurus Resources No. 2. B.V. As of March, the companies have approximately $89.8 million in liabilities and $66.0 million in assets. The NSC Companies' silica mining takes place at mining facilities near BC ("Moberly Plant"), which can produce frac sand, and transport takes place at a facility in Alberta ("Penhold Facility"). Since early 2019, frac sand prices and demand have decreased. In addition to these market-wide issues, because the operations at the Moberly Plant have been uneconomic at this time, operations were shut down in late February. During the CCAA proceedings, the companies will be implementing a court-supervised sale and investment solicitation process. Vitreo Minerals Ltd. will be providing up to $3.0 million in DIP financing. Alvarez & Marsal was appointed monitor. Counsel is McMillan for the company, Cassels for the applicants, and Torys for the monitor.
Korite International, a Calgary, Alberta-based company that is one of the world's largest commercial producers of ammolite, an opal-like organic gemstone, obtained production under the CCAA on June 30. Two significant events over the last year have led to the company's current financial struggles: unrest in Hong Kong and more recently, the COVID-19 pandemic. A significant amount of sales are generated through trade shows in Hong Kong; however, these have been cancelled since last August due to violent protests and airport closures. The pandemic has resulted in a shut down of retail stores, the cruise industry, tourism and travel markets. In addition, due to their own financial constraints arising from the pandemic, major cruise lines and retailers have stopped paying their suppliers, which are Korite's wholesale customers. In light of the economic impact of the aforementioned factors and the uncertainty as to when circumstances may improve, the company determined that it could not sustain itself and must pursue restructuring alternatives. BDO was appointed monitor. Counsel is Bennett Jones for the company and Burnet, Duckworth & Palmer for the monitor.