Hutchens et al., a group of individuals who allegedly orchestrated a fraudulent loan scheme, was placed in interim receivership on February 28 on application by Gary Stevens, Linda Stevens and 1174365 Alberta ("117 Alberta") (collectively, the "Applicants"). Gary and Linda, residents of Alberta, are the sole shareholders of 117 Alberta. The Applicants sought a receivership order to protect their ability to enforce two final judgments against Tanya Hutchens and Sandy Hutchens from a US federal court in Pennsylvania. The Applicants were defrauded by the Respondents in a fraudulent scheme disguised as a financing enterprise for real estate transactions. In October 2014, the Applicants sought refinancing for mortgage loans on property they were developing in Saskatchewan. They were referred to Westmoreland Equity Fund, which required the Applicants to pay large advance fees for the financing they sought. Over the following months, Westmoreland reneged on its promises to provide financing, changing the amount it said it would loan from $13.9MM (CAD) to $7.5MM (CAD), on conditions Westmoreland knew the Applicants could not meet. The Applicants realized that Westmoreland was the front for a fraudulent scheme orchestrated by the Hutchenses. Westmoreland would first issue loan commitments that it could neither fund nor intended to. Then, it would create a pretext to find fault with the borrowers' loan applications, which it used to justify imposing further monetary conditions. Finally, Westmoreland would assert its victims had not satisfied these new conditions in order to terminate the loan application process, after which Westmoreland would keep all the monies advanced. The Applicants brought a claim against Westmoreland and the Hutchenses in the Pennsylvania State Court because the company was registered as operating in Pennsylvania. Farber was appointed interim receiver. Counsel is Necpal Litigation for the Applicants and Naymark Law for the interim receiver.
Sage Gold (TSXV:SGX), a Toronto, Ontario-based near term producer and gold exploration company with two principal assets respectively located in Timmins and Thunder Bay, was placed in interim receivership on July 13 on application by CRH Funding II Pte, owed approximately $38.8MM. On July 10, the company announced that for the quarter ending in March, it had suffered a net loss of approximately $3.0MM. The company is facing severe liquidity and can no longer make payments to its contract mine manager, Richie Services, who is owed over $1.4MM. In addition, the two key suppliers that the company requires for its reporting to the Ministry of Environment have ceased to provide information to the company. The purpose of the proposed receivership proceedings is to secure the company's assets, property and undertakings (the "Property"); complete the process of placing its mines on care and maintenance; and for the receiver to realize on the Property. Deloitte was appointed interim receiver. Stikeman Elliot is counsel to the applicant.
Luxury and Sports Cars, a Woodbridge, Ontario-based used luxury car dealer, was placed in interim receivership on July 4 on application by RBC, owed approximately $450.3M. On June 4, RBC engaged msi Spergel (ICIN) as a consultant to review the company's financial and operational performance, and to evaluate RBC's security position. When msi Spergel (ICIN) attended at the company's premises to carry out its mandate, it discovered that substantially all of the used cars that form the company's inventory had been removed from the premises, effectively defeating the enforcement of RBC's rights under its security. msi Spergel (ICIN) was appointed interim receiver. Counsel is Aird & Berlis for RBC, Harrison Pensa for the interim receiver and Soble, Rickards & Associates for the company.
Mt. Cross Pharmacy, a Hamilton, Ontario-based retail pharmacy, was placed in interim receivership on May 16 on application by CWB Maxium Financial, owed approximately $4.6MM. msi Spergel (ICIN) was appointed interim receiver. On June 14, 2018, the applicant sought and obtained a receivership order appointing msi Spergel (ICIN) as the receiver over the company. The pharmacy's business has been negatively impacted by several developments, including the opening of a competing pharmacy located close to Mt. Cross, as well as the pharmacy's website defaulting to that of the competing pharmacy. Counsel is Pallett Valo for the receiver and Miller Thomson for the applicant.
Direction Nord-Sud, a Montreal, Quebec-based logistics company, was placed in interim receivership on April 27 on application by Third Eye Capital (TEC), owed approximately $6.4MM. Since 2015, numerous events of default occurred and continue to occur under the loan agreement. TEC held off enforcing its security while the company, with the assistance of Richter, ran its own informal sales process. No transaction transpired however, nor was the company able to refinance with a different lender when the loan matured in June 2017. In 2017 and through 2018, TEC discovered a number of alleged fraudulent and suspicious activities, including the overstatement of revenue and accounts receivable and the depositing of certain receipts into a related company's bank account. On April 16, without consulting TEC, the company filed an NOI, with BLT Lapointe & Associés acting as trustee. Concerned about the dishonesty, lack of transparency, and deviousness of the company's principals, and fearing a deterioration of its security, TEC applied for an interim receivership order. KPMG was appointed interim receiver and was authorized to commence an accelerated sales process for the company's assets. Counsel is Fishman Flanz Meland Paquin for the applicant.