Our summaries of recent Canadian insolvency filings.
January 17, 2019
Pizza Salvatore, a Thetford Mines, Quebec-based pizza restaurant franchise with more than 12 restaurants in operation in Quebec, filed for bankruptcy on January 17, listing $761.0M in liabilities. Raymond Chabot is the bankruptcy trustee.
January 17, 2019
Gymboree Group, a San Francisco, California-based chain of specialty retail stores for children’s apparel with operations across the US, Canada and Australia filed for bankruptcy under Chapter 11 in the United States Bankruptcy Court on January 17. Concurrently, Gymboree ("Gymboree Canada" or the "Company") filed an NOI on January 17, listing $9.4M of liabilities, including $8.9M of liabilities that are owed to entities that are subsidiaries of the Gymboree Group. The Company operates 49 retail stores in Alberta, British Columbia, Manitoba, Nova Scotia and Ontario. A group of agents including Great American, Tiger, Gordon Brothers, and Hilco (the "Agents") will be leading liquidation efforts across the US and Canada. KPMG is the proposal trustee. Counsel is Norton Rose Fulbright for the Company, Osler for the proposal trustee and Cassels Brock for the Agents.
January 11, 2019
2433552 Ontario, carrying on business as GreenTerra Homes, filed for bankruptcy on January 11, listing $5.0MM in liabilities. The company commenced operations in 2017 as a custom builder of steel frame modular homes, metal buildings, sheds and related prefab kits. The company operated from a 110,000 sq. ft. plant located in Trenton, Ontario, which is owned by a related corporation. Albert Gelman is the bankruptcy trustee.
January 10, 2019
Kodiak Group of Companies, a St. Albert, Alberta-based full service wireline company with operations throughout Western Canada and the US, was placed in receivership on January 10 on application by ATB Financial. EY was appointed receiver. Norton Rose Fulbright is counsel to the applicant.
January 9, 2019
International Herbs (B.C.), a Surrey, British Columbia-based producer and distributor of fresh herb products to retail grocers across Canada with operations in British Columbia and Ontario, filed for bankruptcy on January 9, listing $5.3MM in liabilities, including $571.7M to BMO and $604.4M to Coastal Fresh Farms. The Bowra Group is the bankruptcy trustee.
January 9, 2019
Horseshoe Bay Resources, a Calgary, Alberta-based exploration and production company, filed for bankruptcy on January 9. Grant Thornton is the bankruptcy trustee.
January 8, 2019
Vari-Form, a Strathroy, Ontario-based leading auto parts manufacturer, filed for protection under the CCAA on January 8, listing approximately $57.4MM in liabilities. Established in 1988, the company is the primary provider of hydroformed components to the Fiat Chrysler Automative business ("FCA") on certain Dodge Ram and Jeep lines. It is the only Canadian-based operating subsidiary in the Vari-Form Group's hydroforming business. In early 2018, the company began experiencing serious financial difficulties. It attempted to launch several new programs, including ones that used a new type of steel that significantly increased the burden on the company's equipment and processes. Due to engineering and mechanical challenges arising from the new steel, as well as unplanned downtime, management hired supplemental employees and funded significant cost overruns to protect customer schedules. As a result, the company incurred millions of dollars in excess program launch costs, which severely strained its liquidity. Despite widespread efforts over the recent months to resolve operational issues and reduce costs, including negotiations with its secured lenders, key customers and other stakeholders, the company has been unable to negotiate a sustainable solution. In November 2018, the company and its related companies retained Angle Advisors - a US-based investment banking firm - to conduct a marketing and sale process for their businesses. Based on recent cash flow statements, the company estimates that its operations are sustaining a cash burn of more than $1.0MM per week. Because the company is insolvent and unable to meet its liabilities as they become due, it requires the protections of the CCAA to obtain the liquidity needed to maintain operations while pursuing the going concern sale of its business on an expedited basis. 11032569 Canada, which is an affiliate of FCA and the proposed DIP lender, has entered into a stalking horse APA. PwC was appointed monitor. Canadian counsel is Osler for the applicant, McCarthy for the monitor, BLG for Fiat Chrysler Automobiles and 11032569 Canada and Blakes for the Term Loan Lenders under the company's Term Loan Agreement. American counsel is Jones Day for Vari-Form Holdings Group, Sullivan & Cromwell for Fiat Chrysler Automobiles and 11032569 Canada and Proskaeur Rose for the Term Loan Lenders.
January 7, 2019
1902408 Ontario, a Brockville, Ontario-based corporation, had certain of its property placed in receivership on January 7 on application by Grant Thornton, in its capacity as court-appointed receiver of Paramount Equity Financial Corporation, Silverfern GP and other related entities, owed approximately $5.4MM pursuant to a loan that was secured by a mortgage registered against title to real property in Brockville, Ontario (the "Brockville Property"). The Brockville Property includes an approximately 143,000 square foot building complex that was previously Greenville Christian College. The building complex, which is currently operating as an event space under the name "Thousand Island Village", consists of 19 two-storey apartment townhouses, a dining hall, chapel, offices, a coffee shop and a dormitory that is currently occupied by students from the Fulford Academy. On June 2018, Grant Thornton demanded full payment of the outstanding amount of the loan. To date, the company has not made any payments to Grant Thornton in connection with its demand. Grant Thornton was appointed receiver of the Brockville Property. Chaitons is counsel to the applicant.
December 28, 2018
Terra Nova Transport, a Salisbury, New Brunswick-based transportation company with a 30+ year history, filed for bankruptcy on December 28. EY is the bankruptcy trustee.
December 21, 2018
244931 Ontario, a special purpose entity wholly owned by Bondfield Construction, was placed in receivership on December 21 on application by BMO, as administrative agent for a syndicate of lenders, owed approximately $230.6MM. The company has no significant assets other than certain contracts relating to the St. Michael's Hospital Redevelopment Project. Due to various defaults committed by Bondfield, the contractor, there have been delays in the construction of this project, which involves building a new 17-storey patient-care tower at the corner of Queen and Victoria Streets in Toronto, Ontario. In addition, there are a number of construction liens registered on the project site, and as a result of Bondfield's financial challenges, the project has effectively come to a halt. Notwithstanding these default events, the company has not taken any steps to declare Bondfield in default under their construction contract or to make demand under the performance bond. In November 2018, the hospital delivered a default notice. With the hospital's support, BMO has been attempting to work consensually with Zurich Insurance, the project's surety, to restart and complete the project. However, BMO has been advised by Zurich that it cannot make demand on the performance bond unless it first "steps in" to the project, a step which may create additional liability for the lenders. Alvarez & Marsal was appointed receiver to facilitate the prompt resumption of the construction work and completion of the project. Counsel is Chaitons for the applicant, Osler for Bondfield, GSNH for Zurich Insurance, McCarthy for the hospital, Blakes for the receiver and Cassels Brock for Infrastructure Ontario. EllisDon is prepared to serve as the replacement contractor to complete the project.