Forme Development Group, a Markham, Ontario-based commercial and residential real estate development group specializing in low-rise, high-rise, mixed-use and hospitality developments, had its NOI proceedings converted into a single CCAA proceeding on November 30, listing over $220.0MM in mortgage debt. The company, which currently owns 18 development projects primarily located in the GTA, has been experiencing increased stress on its cash flows for the last year, which has led to occasional late and missed debt payments. In recent months, however, the company has encountered serious liquidity issues due to a slowdown in the real estate market in the GTA, as well as delays in planning and development of several projects resulting from municipal delays. Consequently, the company can no longer advance its projects since it does not have the liquidity to pay development costs. KingSett Mortgage Corporation will be providing the company with $5.0MM in advance interim financing for certain of the projects. The company intends to finalize a sales process for the projects. KSV Advisory was appointed monitor. Counsel is GSNH for the company, Bennett Jones for the monitor and Goodmans for KingSett Mortgage Corporation.
Gestion Maison Éthier and Gestion Immobilière Maison Éthier, which operate household furniture stores in Saint-Jean-sur-Richelieu and Saint-Basile-le-Grand, Quebec, filed an NOI on November 9 and KPMG was appointed proposal trustee. Desjardins, owed approximately $14.0MM, eventually filed a motion for the appointment of a receiver to liquidate the assets of Gestion Maison Éthier. In response, the two companies filed a concurrent CCAA application to submit a preliminary restructuring plan to the court that would benefit the mass of creditors. On November 15, the court allowed the companies to continue their reorganization proceedings under the CCAA. KPMG was appointed monitor. The companies owe approximately $5.5 to BDC and $7.9MM to their other creditors. In 2016, Sylvain Bonneau and François Éthier acquired Maison Éthier for $19.0MM. Not only did they find this transition challenging, the rising popularity of online furniture and mattress retailers such as Casper, Endy and Wayfair also contributed to their considerable decline in margins. Counsel is Gilbert, Séguin & Guibault Avocats for Desjardins, Gowlings for BDC, Fasken for Fédération des Caisses Desjardins, Blakes for the monitor and Groleau Gauthier Plante for the companies.
OpenHydro Technology Canada, a Dartmouth, Nova Scotia-based company and wholly-owned Canadian subsidiary of OpenHydro Group of Ireland, which is controlled by French-based Naval Energies, converted its BIA proposal proceedings to CCAA proceedings on November 7. The group of companies specializes in developing marine-based renewable energy solutions, including harnessing tidal energy to create electric power. OpenHydro was managing the Cape Sharp Tidal Venture (CSTV), a tidal energy project located off Nova Scotia in the Minas Basin, an inlet of the Bay of Fundy. The CSTV is a joint venture of which OpenHydro’s parent company is the majority shareholder. OpenHydro’s operating capital was cut off when its parent company, OpenHydro Group, filed for liquidation in Ireland. One of the company’s main assets is the Scotia Tide, a barge used in the installation, recovery and testing of CSTV’s tidal turbines. The barge, which was built in 2016 at an approximate cost of $30.0MM, is subject to numerous marine claims filed in the Federal Court. The company plans to initiate a sales process for the Scotia Tide barge as well as attempt to recover various financial assets in hopes of satisfying the claims of its creditors. OpenHydro owes approximately $6.0MM to a variety of Atlantic Canadian marine service contractors that helped in the installation of a turbine in July, but never received payment. The Supreme Court of Nova Scotia approved a $500.0M DIP facility and charging order; however, the CCAA Initial Order did not exempt the marine claims from being advanced in the Federal Court. OpenHydro is meeting with its counsel to prepare a motion to the Federal Court to have the CCAA stay of proceedings recognized by the Federal Court. Grant Thornton was appointed monitor. Cox & Palmer is counsel to the company.
Harvest Fraser Richmond Organics, an indirect subsidiary of Harvest Power, a Massachusetts-based company that specializes in converting food and yard waste into biofuel, compost and fertilizer, filed for protection under the CCAA on October 12, listing approximately $23.6MM in liabilities, including $16.3MM to Harvest Canada and $5.1MM to Harvest Power. The company owns and operates a manufacturing facility in Richmond, British Columbia for processing organic waste ("Compost Facility"), as well as an electricity-producing anaerobic digestion facility ("Energy Garden"). Pursuant to agreements with various cities in the lower mainland, the company accepted organic and food waste materials from these cities for processing at its facility. In September 2016, Metro Vancouver issued an air quality management permit to the company containing requirements such as reducing the height of compost piles and replacing its composting system. Despite operating under this permit, the Compost Facility has been affected by odour complaints from neighbouring residents since 2016 and has been the subject of reporting by Vancouver media outlets. In response to these complaints, the Energy Garden eventually ceased operation in April 2017. This shut down resulted in the company being unable to meet its energy delivery obligations to the British Columbia Hydro and Power Authority ("BC Hydro") under its agreement to sell BC Hydro certain quantities of renewable energy generated by the Energy Garden. BC Hydro advised that it would bill the company $12.5M in respect of the energy delivery shortfalls to date. The company cites further reasons for its financial difficulties, including, among other things, the fact that the company had to shut down one of its composting systems under the permit, which reduced the company's revenue. In addition, as of February 2018, Metro Vancouver has diverted certain of its waste to alternate service providers for processing. During these CCAA proceedings, Maynbridge Capital will be providing up to $1.0MM in DIP financing. EY was appointed monitor. Bennett Jones is counsel to the company.
Purewal Blueberry Farms, one of North America's largest blueberry farms, located in Pitts Meadow, British Columbia, filed for protection under the CCAA on October 11, listing approximately $17.8MM in liabilities, including $4.8MM to the Receiver General for Canada and $1.1MM to Netpak Paper & Packaging. The company already filed an NOI on April 30 but needs additional time to complete a sale process. Along with the initial CCAA order, the court granted an order approving a stalking horse agreement of purchase and sale. FTI Consulting was discharged as proposal trustee and appointed monitor under the CCAA proceedings. Counsel is Clark Wilson for the company and Cassels Brock for the monitor.
The Kraus Group, a Waterloo, Ontario-based manufacturer of premium carpet for the commercial and residential market, obtained protection under the CCAA on September 11, owing approximately $48.2MM to Wells Fargo, its senior secured lender. Established in 1959, the Group comprises 12 entities and operates two large carpet-manufacturing and logistics facilities. The Group also has two business divisions: the manufacturing of broadloom carpets ("Broadloom Business"), which accounts for 46% of its revenues, and the distribution and sale of flooring products ("Flooring Business"), which accounts for 54%. Over the last five years, the Group has sustained substantial losses for several reasons. First, its performance was negatively impacted by the downturn in the carpet manufacturing industry due to a shift in consumer preferences to hard surface flooring and the availability of cheaper broadloom carpeting from China. Second, the Group faces significant fixed costs, including those associated with maintaining and operating its facilities. In March 2018, Hilco UK - the sole shareholder of Pinnacle Capital Resources, who is the general partner of Red Ash Capital Partners, the Group's junior secured creditor who is owed $100.0MM - engaged Deloitte Corporate Finance to assist the Group with marketing and sale of the Broadloom Business. However, due to its dire financial circumstances and the lack of a going concern transaction, the Broadloom Business ceased activity on September 8, affecting 256 workers. Florida-based QEP will acquire substantially all of the assets related to the Flooring Business. This sale provides for the continued employment of 71 Canadian employees and a cash inflow that can be used to immediately reduce the indebtedness owed to Wells Fargo. Deloitte was appointed monitor. Counsel is Cassels Brock for the Group, Miller Thomson for the monitor, and Bennett Jones for Wells Fargo and QEP.
Great Slave Helicopters, one of Canada's largest onshore helicopter operators with two main bases located in Yellowknife, Northwest Territories and Calgary, Alberta, filed for protection under the CCAA on September 4. For the past several years, the company has experienced annual losses exceeding $5.0MM. It attributes its financial difficulties to a downturn in the oil, gas and mining sectors, growing maintenance costs, and a global depression in the helicopter charter services market. Until recently, the company was solely owned by Discovery Air, which filed for protection under the CCAA in March, with $127.0MM of debt set to mature, including $93.0MM of secured debt that had been guaranteed by the company and other members of Discovery Air's Group. Discovery Air's assets and liabilities were eventually purchased in July by a company formed by its largest creditor, Clairvest Group. Currently, the company is in default of existing obligations under its secured guarantee in favour of Clairvest, owed $71.3MM. Together, they have been engaged for some time in efforts to restructure the company's business and operations to be viable on a long-term basis. However, due to the company's anticipated need for additional funding and Clairvest's unwillingness to provide such further funding, the company has concluded that a restructuring or sale of its business is best facilitated through CCAA proceedings. Because of the seasonality of the company's business - with most of its revenue earned in June to September - it will require significant funding until its next busy season. KSV Advisory was appointed monitor. Counsel is GSNH for the company, Goodmans for the monitor and Torys for Clairvest.
Intema Solutions (TSX-V:ITM), a Montreal, Quebec-based consulting company that helps its customers optimize their online marketing activities, filed for protection under the CCAA on August 29. The company has yet to develop a restructuring plan. Demers Beaulne was appointed monitor.
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).