Welland Forge Corp., a Welland, Ontario-based manufacturer of custom metal forgings, filed an NOI on October 27, listing approximately $11.3 million in liabilities. Welland Forge Corp.’s biggest customers have historically been in the automotive industry. Its customers are particularly vulnerable to the volatile nature of the oil and gas industry, and the pandemic has exacerbated that volatility. Earlier in the year, the company suffered the loss of its major customer, which accounted for approximately 65% of the company's sales, to an overseas supplier. Accordingly, the company has identified the need to wind down its operations. The company previously terminated its approximately 60 employees. BDO is the proposal trustee. Counsel is Miller Thomson for the proposal trustee and Madorin Snyder for the companies.
HOW Fashions International Inc., Montreal, Quebec-based importer and distributor of women’s and men’s high-end fashion brand clothing and accessories, and 9896481 Canada Inc., the owner of certain trademarks related to fashion brands sold by HOW Fashions International Inc., each filed an NOI on October 22. The business suffered drastic financial difficulties as a result of the COVID-19 pandemic, resulting in the brand and the related merchandise having little realizable value. HSBC, the companies' senior secured creditor, engaged EY to assess the companies' operations with the companies' advisors. In August, the companies and their advisors began to implement a recovery and exit plan, including soliciting prospective purchasers for the sale of some or all of the companies’ assets. This resulted in the companies receiving an offer made by Captive Brands Corp. to purchase all of the companies’ intellectual property, as well as assets of its US counterpart, HOW International USA, Inc. The Quebec Superior Court (Commercial Division) granted an Approval and Vesting Order on October 29. EY is the proposal trustee. Counsel is Kugler Kandestin for the companies, Scheib Legal for Captive Brands Corp., Davies for HSBC and Fasken for the proposal trustee.
Greenfire Oil and Gas Ltd. and Greenfire Hangingstone Operating Corporation, Calgary, Alberta-based energy technology companies focused on the development of in-situ oil sands projects, filed NOIs on October 8, respectively listing $8.3 million and $17.8 million in liabilities. Starting in the first quarter of 2020, the sole marketer of the bitumen produced at the companies' facility failed to make payment on over 300,000 barrels of bitumen that the companies had produced. This resulted in a severe working capital and liquidity shortage, leading to the termination of all employees in May 2020. In addition, the companies' strategic process has been complicated by the public health emergency caused by COVID-19. Alvarez & Marsal is the proposal trustee. Counsel is Burnet, Duckworth & Palmer for the companies, McMillan for the proposal trustee and Blakes for secured lender, Summit Partners.
Okaïdi Canada, the Canadian subsidiary of a French children's clothing retailer, filed an NOI on October 7, listing approximately $15.8M in liabilities. In 2010, the company entered the Canadian market and currently operates 15 stores in Quebec and Ontario. Given the COVID-19 environment and the impact on the retail sector, the company suffered significant losses and a major reduction in its sales. The company will evaluate its restructuring options in the coming weeks, including having discussions with landlords. Richter is the proposal trustee. Counsel is BDG Law for the company and Stikeman Elliott for the proposal trustee.
Fun and Fitness Trampolines Inc., a Kitchener, Ontario-based “SkyZone” franchise operating a playground area where adults and children make use of trampolines and similar fitness and recreational equipment, filed an NOI on October 3. According to the company, the filing was necessitated by, chronologically: (1) insurance costs which essentially quadrupled, (b) the impact of COVID-19, and (c) the company's financing and guaranteeing the obligations of two related companies, which failed outright due to COVID-19. On November 6, the Ontario Superior Court of Justice (Commercial List) approved a sales process for the company's assets and a stalking horse agreement with a related company. Crowe Soberman is the proposal trustee. Counsel is Simpson Wigle for the proposal trustee and GSNH for the company.
JMX Contracting Inc., JMX Leasing Inc., JMX National Inc. and BRND Properties Inc. (the "JMX Group"), which are part of a corporate group in the business of environmental contracting and construction services in Ontario, had their NOI proceedings continued under the CCAA on September 29. The JMX Group owed RBC approximately $4.4 million at the time of the NOI filings on April 17 and 20. Aside from its indebtedness to RBC, the JMX Group's current financial difficulties are largely attributable to the breakdown of two demolition projects with Ontario Power Generation ("OPG") and ASNA Robson Landmark Developments Limited ("ASNA"), which are the subject of ongoing litigation in Ontario and British Columbia. The CCAA proceedings will allow the JMX Group the flexibility to deal with remaining issues without adhering to the 6-month timeline imposed on NOI proceedings. During these CCAA proceedings, the JMX Group will be receiving up to $1.0 million in DIP financing from JMX Environmental Inc., BRND Properties Inc., and Dahl Demolition Corp. Crowe Soberman was appointed monitor. Counsel is Weisz Fell Kour for JMX Group, Chaitons for the monitor, Blakes for OPG, and Boughton Law for ASNA.
2505243 Ontario Limited, a Vaughan, Ontario-based company that is part of a broader group of companies which operates in the hospitality business (the "Group"), filed an NOI on September 24 in response to the filing of an application for a bankruptcy order by Princes Gates GP Inc. and Princes Gates Hotel Limited Partnership (collectively, "PGH"). The company, listing approximately $8.2 million in liabilities, previously provided food, beverage, and catering services at the Hotel X Toronto, which is operated by PGH. Since the deadline for the company to file a proposal expires on October 24, the company requested a deadline extension to allow it to pursue its litigation claim against PGH and seek to realize upon any other assets. Peter and Paul's Gifts Limited, a related party and member of the Group, has agreed to provide funding to the company for its proposed extension period. KSV Advisory is the proposal trustee. Norton Rose Fulbright is counsel to the company.
Essentia Group Inc. ("Essentia") and 6860966 Canada Inc. ("686") (collectively, the "Debtors") filed NOIs on September 14. Essentia is a domestic manufacturer and distributor of organic memory foam mattresses with facilities in Laval, Quebec, and 686 owns the patent and trademarks used by Essentia in the conduct of its business. Started in 2006, the Debtors' business has recently been plagued by a series of profitability issues and financial difficulties, including the $1.0 million it sustained in losses after its retail expansion in the US did not result in profitability, as well as the COVID-19 pandemic. Consequently, the Debtors continue to accumulate significant losses which have been financed by credit facilities provided by BMO and loans provided by BDC, BDC Capital Inc., and Investissement Québec. Since 2017, the Debtors have been engaged in several unsuccessful discussions with parties regarding the possibility of purchasing some or all of their assets or becoming the Debtors' financial partner. In August, While You Were Sleeping Inc. (on behalf of a purchaser) offered to purchase all of Essentia's movable property and 686's intellectual property. The court has issued an Approval and Vesting order authorizing the sale of the Debtors' assets to the purchaser, which will enable the continuation of Essentia's business and retain the jobs of its 15 employees. MNP is the proposal trustee. Counsel is Kugler Kandestin for the Debtors, Fishman Flanz Meland Paquin for the purchaser, Davies for the senior secured lender, BMO, and Société D'Avocats Dexar for BDC and BDC Capital Inc.
Geox Canada Inc., which is indirectly controlled by Geox SpA ("Geox"), a global shoe and clothing retailer based in Italy, filed an NOI on September 8. Since the beginning of the COVID-19 pandemic, traffic in stores in North America remains more than halved. In the first half of 2020, Geox's revenues amounted to $7.2 million (EUR), representing a 54% decrease compared to the first half of 2019. At this time, the company is utilizing the stability afforded by the NOI to consider its various restructuring options. Geox, which has been restructuring its operations for several years, intends to streamline its physical store network and focus on its online business. Richter is the proposal trustee. Counsel is Aird & Berlis for the company and Fasken for the proposal trustee.
Zargon Oil & Gas Ltd. (TSX:ZAR), a Calgary, Alberta-based oil and gas producer, filed an NOI on September 8, listing approximately $9.2 million in liabilities. Currently, the company is actively engaged in discussions with an arm’s length third party in connection with the company's potential restructuring. These discussions are focused on obtaining the additional financing necessary to provide the company with increased liquidity and its creditors with a better outcome than the alternatives currently available. MNP is the proposal trustee. Counsel is Burnet, Duckworth & Palmer for the company and McMillan for the proposal trustee.