Cangap et al., a Toronto, Ontario-based private equity group that seeks secured lending opportunities with a focus on management buyouts, acquisitions and consolidations, was placed in receivership on November 15 on application by Creative Wealth Monthly Pay Trust and Creative Wealth Capital (together the "Trust"). The Trust discovered that it is likely the victim of a scheme perpetrated by the respondents to misappropriate approximately $10.7MM in investments. As part of an overarching investment vehicle between the applicants and respondents, the Trust invested substantial funds in the respondent limited partnership, Cangap Merchant Capital LP ("CMC LP"). However, since August 2015, CMC LP has failed to remit any payments to the Trust; furthermore, the Trust has discovered that CMC LP is no longer listed as an active entity, contrary to its contractual obligations. To date, CMC LP and its general partner, Cangap Merchant Capital Corp. ("CMC GP"), as well as the sole director and officer of CMC LP and CMC GP, Emlyn David, have refused to provide the Trust with any financial statements, reports or responses. The Trust also allege that Mr. David has apparently started to sell or dissipate assets, and that he has co-mingled finances. In the past several months, the Trust discovered that CMC LP and/or CMC GP had allegedly bought out Skyservice Investments - Canada's largest operator and provider of aviation services - as well as related senior and subordinated debt. Skyservice eventually sold a majority of its equity interest to InstarAGF Asset Management. The Trust alleges that it believes that Mr. David financially benefited from the sale and never advised it of this transaction. Given the compete absence of correspondence and financial reporting of CMC LP, CMC GP and Mr. David, as well as the applicants' suspicion that Mr. David has misappropriated the Trust's funds, the applicants can no longer reasonably have confidence in Mr. David. Fuller Landau was appointed receiver. Counsel is Gardiner Roberts for the applicants and Woolgar VanWiechen Cosgriffe Ducoffe for the respondents.
Sports Villas Resort, a Port Blandford, Newfoundland & Labrador-based golf resort, was placed in receivership on November 12, listing $8.1MM in liabilities, including $3.3MM to BDC. BDO is the privately-appointed receiver.
Money Gate Mortgage Investment Corporation, a North York, Ontario-based mortgage investment corporation, was placed in receivership on November 6 on application by the Ontario Securities Commission ("OSC"). Between 2014 and 2017, the company raised approximately $11.0MM from approximately 155 investors. These funds were then pooled and loaned to borrowers, which loans were secured by residential and commercial mortgages. It is alleged, however, that the company was operating a far riskier mortgage investment business than the one represented to investors. Morteza Katebian and his son, Payam Katebian - the company's principals - are respondents in an enforcement proceeding before the OSC, in which it is alleged that they defrauded investors through misrepresentations contained in disclosure documents and committed other violations of Ontario securities law. In April 2017, the OSC obtained a temporary cease trade order, which is still in effect and which prevents the company from raising any more capital. The company later advised investors that it was winding down its operations; despite this announcement, however, the company continued to make loans and it is alleged that the principals diverted over $1.3MM in corporate funds for their personal benefit. As a result of this recently discovered evidence, the allegations in the OSC proceedings have been expanded to include fraud. In October 2018, the OSC issued a freeze direction. Grant Thornton was appointed receiver and manager. Jamie Gibson and Dihim Emami are counsel to the OSC.
Northern Precast, a Sharon, Ontario-based manufacturer of precast concrete protects, had certain of its property placed under receivership on October 19 on application by 2347186 Ontario. Farber was appointed receiver.
2332361 Ontario, whose primary asset is a commercial office and retail complex located at 133-139 King Street West, Brockville, Ontario, was placed in receivership on October 10 on application by the company's only known secured creditor, First National Financial, owed approximately $1.6MM. The commercial complex, which has a current vacancy rate of 60%, is operating at a loss and the company can no longer cover the operating costs from the rent it receives from tenants. Given this failure to make payments, the complex's maintenance supplier has refused to make certain required repairs which the company is responsible for under its leases. As a result, the company is concerned that the tenants may begin withholding rents, which would further erode the company's liquidity. The court appointed KSV Advisory as receiver and approved a sale process for the company's real property. The appointment of a receiver will assist to normalize the operations at the complex and allow a receiver to negotiate with Elections Canada with respect to its possible lease of space beginning in November 2018. KSV intends to retain Jones Lang LaSalle, a recognized real estate brokerage, as the listing agent. To fund these receivership proceedings, First National will be providing up to $200.0M in financing. Counsel is Fasken for the applicant and Kramer Simaan Dhillon for the company.
Intelligent Mechatronic Systems ("IMS") and Ridetones, Waterloo, Ontario-based technology companies in the business of developing and delivering advanced end-to-end mobile in-car solutions aimed at enhancing driver behaviour, were placed in receivership on September 14 on application by B.E.S.T Active 365 Fund LP et al., owed approximately $16.4MM by IMS and $12.1MM by Ridetones. The companies, which have been in default since March 2017, remain in default at present. Since these defaults arose, the companies have engaged in company-led efforts to refinance their indebtedness and/or sell its shares or assets. All refinancing and sales efforts have failed, however, to lead to any transaction which would have allowed the companies to repay their indebtedness. In early May 2018, in response to their financial difficulties, the companies' engaged Iberis Advisors, an outside investment bank, to administer a sale and investor solicitation process. This effort, too, proved unsuccessful. The companies are currently facing urgent and pressing liquidity issues, and their lenders are no longer willing to support them. PwC was appointed receiver. Counsel is Bennett Jones for the applicants, Norton Rose Fulbright for the companies and BLG for the receiver.
Restoration Energy, an Airdrie, Alberta-based home maintenance and repair company, was adjudged bankrupt on September 14 on application by Grant Thornton, the receiver of Crystal Wealth Enlightened Factoring Strategy, owed approximately $1.5MM. The Bowra Group is the bankruptcy trustee. MLT Aikins is counsel to the applicant.
Boss Logo Print & Graphics, a Markham, Ontario-based trade printer was placed in court-appointed receivership on September 4, on application by TD, owed approximately $3.3MM. The company then filed for bankruptcy on September 14. Established in 1995, the company evolved into an industry leader in online trade-printing services. Despite recently purchasing additional presses and other equipment, the company has been unable to recover from the financial difficulties it experienced over the past several years. MNP is the receiver and bankruptcy trustee. Counsel is Aird & Berlis for TD and Lerners for MNP.
Sameh Sadek, an individual based in Brampton, Ontario, had his domestic assets, undertakings and properties, including several pharmacies, placed under receivership on September 11 on application by AstraZeneca Canada. The applicant anticipates that the receiver will exercise its powers to investigate and trace the substantial funds which appear to have been transferred out of Sadek's accounts to other local and overseas accounts, including to Egypt. The receiver will also secure and take possession of Sadek's assets, including two residential homes, and then commence a process to market and sell those assets. Alvarez & Marsal was appointed receiver. Counsel is Blakes for the applicant and Aird & Berlis for the receiver.
Niska North, a Chapleau, Ontario-based company that carries on business as a sawmill manufacturing cedar lumber products, was placed in receivership on August 24 on application by Northern Ontario Heritage Fund Corporation, owed approximately $2.1MM. The company ran into business difficulties in 2008 almost immediately after it purchased a sawmill plant formerly owned by Domtar, citing unfavourable market conditions and lack of profitability. In December 2010, the company completely ceased operations, shutting down the sawmill and laying off all its staff. While the company's manager has made several efforts over the last seven years to find a buyer, they have been unsuccessful and the sawmill is currently abandoned. The court approved a sales process for the sawmill and appointed A. Farber & Partners as receiver.