Einstein Exchange, a Vancouver, British Columbia-based cryptocurrency exchange with customer deposits equivalent to over $16.3 million, was placed in interim receivership on November 1 on application by the British Columbia Securities Commission. After receiving multiple complaints from members of the public claiming that they could not access their funds from Einstein, as well as complaints about improper use of funds and potential money laundering, the Commission issued an investigation order in May 2019. As part of the investigation, on October 31 the Commission demanded that Einstein, through its counsel, provide information about where its cryptocurrencies are stored. Two hours later, Einstein's counsel notified the Commission that it was no longer representing the company. The next day, the Commission visited Einstein's office and discovered that the elevator was locked for all floors. A phone call to the number listed on the company's website's stated that all its agents were unavailable. An interim receivership order was therefore immediately sought to preserve and protect the cryptocurrency and other assets of or held by the company. Grant Thornton was appointed interim receiver. Lawson Lundell is counsel for the applicant.
Houston Oil & Gas, a Calgary, Alberta-based oil and gas company that focused on acquiring and rejuvenating legacy oil and gas assets, was placed in receivership on October 29 on application by the Orphan Well Association. Holding licenses to operate over 1,400 sites in Alberta, the company has been in discussions with the Alberta Energy Regulator (AER) for several months in relation to its financial difficulties. In early October, the company advised the AER that it had ceased operations and did not have the ability to shut-in all of its wells. In the interest of public safety, the OWA moved for a receiver to be appointed to ensure the wells are properly maintained and, where possible, sold and placed in the hands of responsible producers. The total abandonment and reclamation obligations relating to the company's assets are estimated to be over $81.5 million. Hardie & Kelly was appointed receiver. Miles Davison is counsel for the applicant.
DionyMed Brands (CSE: DYME), a Vancouver, British Columbia-based cannabis company, was placed in receivership on October 29 on application by GLAS Americas, owed, together with certain other lenders, approximately $24.8 million. The company generated its revenue primarily in the United States, selling a portfolio of wholly-owned and third-party brands to over 800 retail dispensaries in California, Oregon and Nevada, as well as providing a direct-to-consumer cannabis delivery service. Despite strong growth, the company was unprofitable; in the first 6 months of the year it recorded a negative operating cash flow of $17.2 million on $34.4 million of revenue. Efforts in recent months to raise additional capital were unsuccessful and the company's secured lenders were unwilling to provide additional funds without a court-supervised process geared to obtaining a permanent solution to the company's capital structure and indebtedness. FTI was appointed receiver. Counsel is Dentons for the applicant, Bennett Jones for the receiver, Stikeman Elliott for SP1 Credit Fund and Blakes for an ad hoc group of bondholders.
Cartise, a Montreal, Quebec-based distributor of women's fashion and apparel, was placed in receivership on October 24 on application by HSBC, owed approximately $1.3 million. Operating for over 40 years, the company sold to various boutiques and other retailers across Canada and the United States. EY was appointed receiver. Davies is counsel for the applicant.
54 Shepherd Road Inc. and 60 Shepherd Road Inc., owners of real property in Oakville, were placed in receivership on October 24 on application by FirstOntario Credit Union, owed approximately $2.6 million. The debtors were planning on developing a high-rise, mixed residential/commercial use project on the property but were unable to obtain construction financing, which, according to the debtors, was due to the structure of its existing financing from syndicated investors. With the debtors unwilling to accept the terms of a forbearance agreement that included bringing property tax and interest payments up-to-date, FirstOntario moved to enforce its security. msi Spergel (GRIP) was appointed receiver. Counsel is SimpsonWigle for the applicant and McCarthy Tétrault for the companies.
Le Bon Croissant, a Mississauga, Ontario-based manufacturer and distributor of baked goods, was placed in receivership on October 24 on application by CIBC, owed approximately $2.5 million. Producing croissants, breads, and frozen baked goods such as garlic bread for large private label brands such as Weston Group and Sobeys, the company was transferred to the bank's special loans group in early October. Soon after, the company's principal advised that he had decided to exit the business and that, absent an immediate cash injection, the company was not viable and could not continue to operate. He further advised that he would be leaving on October 19 for a two and a half week cruise in the Mediterranean and was prepared to "hand over the keys" to CIBC, if CIBC so desired. Demands were promptly made and BDO was appointed receiver. Minden Gross is counsel for the applicant.
Aquila Fabrication and Equipment, a Red Deer, Alberta-based manufacturer of products for the upstream oil and gas industry, along with certain related companies, was placed in receivership on October 18 on application by Tom and Donna Trenerry. Significant and irreconcilable differences have arisen between the applicants, the 100% shareholders of Aquila, and Randal James Hofer, the applicants' son-in-law and an employee in the business responsible for its day-to-day operations. The applicants allege that Hofer is mismanaging the company, including issuing unjustified cheques to himself personally and arranging the company's affairs in a manner which precludes the applicants from having sufficient visibility into the activities and operations of the business. Hofer has allegedly refused to cooperate with the applicants' requests for information and documentation and, fearing that the company may not have sufficient liquidity to meet its obligations, the applicants sought the appointment of a receiver to protect the interests of the company and its creditors. KPMG was appointed receiver. Counsel is Cassels Brock for the applicants, MLT Aikins for the receiver and Warren Sinclair for Randal Hofer.
TamTan Inc., a real estate holding company whose primary asset is a commercial property in Scarborough, Ontario, along with related party EZ Food Group, was placed in receivership on October 16 on application by Roynat, owed approximately $2.4 million. An RCMP investigation into the company's affairs resulted in the federal prosecution of the company's principal, and in February 2019, a restraint order was registered against the property on the grounds that the Attorney General alleges that the property is an offence-related property. Certain of the company's bank accounts were also frozen, and it soon lapsed into default under its loan agreement with Roynat. Roynat gave the company an opportunity to market and sell the property and repay its obligations, but multiple attempts to sell the property have failed and Roynat has lost confidence in the company's ability to facilitate a sale outside of a court process. Spergel (GRIP) was appointed receiver. Blakes is counsel for the applicant.
3070 Ellesmere Developments, an Ontario corporation that owns a vacant parcel of land municipally known as 3070 Ellesmere Road, Scarborough, Ontario, was placed in receivership on September 13 on application by 2478888 Ontario Inc., owed approximately $6.6 million. On August 20, the company filed an NOI and subsequently served materials seeking, among other things: the appointment of a Chief Restructuring Advisor, the appointment of a sales process advisor and the approval of a stalking horse purchase agreement. The lender opposed this motion on the basis that it was in direct contravention of its agreement with the debtor. It also took issue with the anticipated costs of the debtor-driven proceedings, arguing that a Chief Restructuring Advisor, a sales process advisor and a proposal trustee are not all required to conduct a sale process for a vacant parcel of land that a receiver alone could run at a significantly lower cost in a substantially similar timeline. RSM was appointed receiver. Counsel is TGF for the applicant and Cassels Brock for the company.
NTG Clarity Networks (TSX-V:NCI), a Markham, Ontario-based telecommunications company, was placed in interim receivership on October 9 on application by RBC, owed approximately $7.8 million. NTG, along with a related Egyptian company, provide network, IT, and infrastructure support to telecommunication service providers in Egypt, Saudi Arabia and elsewhere in the Middle East. Due to constrained liquidity largely caused by NTG’s inability to sell new software technology on which it had spent approximately $5 million to develop, the company was transferred to RBC’s Special Loans Department in August, 2016 and has remained there ever since. In 2017, it was discovered that NTG had overstated its accounts receivable by counting certain work in progress as receivables, resulting in a $2.2 million over-advance. The over-margin position has recently increased to approximately $3.7 million and RBC has learned that, among other things, two major contracts had been cancelled and the corresponding receivables written off, and numerous customers were disputing invoices. RBC therefore moved for the immediate appointment of an interim receiver to oversee collections and secure receipts until the time that a receivership application can be heard. Grant Thornton was appointed interim receiver. Aird & Berlis is counsel for the applicant.