Our summaries of recent Canadian insolvency filings.
February 21, 2020
Le Cordée, a Montreal, Quebec-based sports and outdoor goods retailer operating five stores in Quebec, filed an NOI on February 21, listing $22.2 million in liabilities, including $10.4 million to National Bank, $857.3 thousand to Arcteryx, and $839.0 thousand to North Face. The company is focused on its transformation, which will include refinancing its operating facility with another lender. MNP is the proposal trustee. EY is financial advisor to the company. PwC is financial advisor to National Bank. Counsel is Norton Rose Fulbright for the company and McCarthy Tétrault for National Bank.
February 18, 2020
Pier 1 Imports, a leading American retailer of home décor and accessories with 65 stores in Canada, had its US Chapter 11 bankruptcy recognized in Canada under the CCAA on February 18. Due to a challenging retail environment and certain strategic missteps under past management, the company experienced a decline in its performance, including substantial declines in revenue as well as operating losses and net losses. As of November 2019, the total liabilities of the company and seven of its subsidiaries were approximately $1.3 billion (USD). Moving forward, the company has decided to close all of its Canadian locations by the end of March 2020 as part of its overall restructuring, with Gordon Brothers handling the liquidation. The company will receive up to $256.0 million in DIP financing to continue its US operations during the Chapter 11 proceedings. Alvarez & Marsal was appointed information officer. Counsel is Osler for the company, Stikeman Elliott for the information officer Norton Rose Fulbright for the DIP senior credit facility lenders and Cassels for Gordon Brothers.
February 14, 2020
Bridge Attainable Housing Society, a Calgary, Alberta-based not-for-profit company, was placed in receivership on February 14 on application by the City of Calgary. By an agreement of purchase and sale ("PSA") with the City, the company agreed to purchase certain lands in Alberta for the purpose of developing an affordable residential housing project. Pursuant to this PSA, the parties agreed to enter into various loan and security agreements in favour of the City. The City alleges that the company did not perform a number of its obligations under these agreements. For example, the company failed to maintain in good standing its status as a not-for-profit organization, and failed to provide the City with audited financial statements for certain years. Given these ongoing issues, the City has lost confidence in the company's ability to oversee the housing project or protect the City's security. Grant Thornton was appointed receiver. Bennett Jones is counsel to the applicant.
February 13, 2020
Invictus MD Strategies (TSX-V: GENE), a Vancouver, British Columbia-based cannabis company, along with certain other related companies, obtained protection under the CCAA on February 13. Several factors contributed to the company's liquidity issues. First, it was unsuccessful in obtaining additional financing to complete a custom-built cultivation facility. Second, the strains of cannabis that are currently being harvested by Acreage - the company's primary operating entity - are not in demand as they do not have sufficient potency. While Acreage is currently in the process of changing over its plants to those with a higher level of potency, these plants will not be ready to harvest until mid-April 2020. Finally, the company's revenues have decreased due, in part, to lower consumer demand and market saturation. The company currently owes approximately $10.6 million to ATB Financial and $5.3 million to Authentic Brands, a New York-based brand management company. PwC was appointed monitor. Counsel is Cassels for the company, BLG for the monitor and Blakes for ATB.
February 12, 2020
Ontario Graphite, a privately-owed Canadian mining company engaged in the re-commissioning and operation of a mining property near Kearney, Ontario, obtained protection under the CCAA on February 12 on application by Orionis, owed approximately $15.0 million (USD). Since at least September 2015, the company has been suffering from operational and liquidity issues. Orionis subsequently advanced funds to the company pursuant to three secured notes. While Orionis has worked collaboratively with the company for several years to resolve its financial and liquidity issues, Orionis is no longer prepared to fund the company outside of a court-supervised process. The company will be able to borrow up to a maximum of $2.8 million in DIP financing from Orionis while it runs a sale and investment solicitation process. Deloitte was appointed monitor. Counsel is Osler for the applicant, BLG for the monitor and Miller Thomson for the company.
February 11, 2020
Dinosaur Trail Golf & Country Club, a Drumheller, Alberta-based golf club, was placed in receivership on February 11 on application by ATB Financial, owed approximately $1.2 million. Hardie & Kelly was appointed receiver and manager. Dentons is counsel to the applicant.
February 10, 2020
Tri-Ag Implements, a Wainwright, Alberta-based agriculture equipment supplier, filed an NOI on February 10, listing $15.4 million in liabilities, including $4.7 million to CNH Industrial Capital Canada, $3.7 million to Farm Credit Canada, $2.8 million to De Lage Landen and $2.7 million to Encompass Credit Union. A few days prior to the NOI filing, on February 6, an interim receivership order was granted over the assets subject to FCC's security. FCC provides the company with floor plan financing and became worried when it was discovered that at least five pieces of machinery had recently been sold without the sale proceeds being remitted to FCC. The Bowra Group is the proposal trustee. EY is the interim receiver. Counsel is Reynolds Mirth Richards & Farmer for the company and Sharek Logan & van Leenen for FCC.
February 4, 2020
1034179 B.C. Ltd., a British Columbia-based developer of a 66-unit rental property in Maple Ridge, British Columbia, obtained protection under the CCAA on February 4, listing approximately $22.0 million in liabilities, including $6.3 million to Canadian Western Bank. In April 2017, the company purchased the Maple Ridge property and began development with $3.8 million of purchase financing from its subordinate lenders. It was contemplated that construction would finish at the end of June 2018. By the fall of 2017, however, the company realized that construction was taking longer and costing more than initially anticipated. In the beginning of 2018, the company managed to secure an additional loan from its subordinate lenders as well as from CWB in order to complete construction of the property. Shortly after these financings, it became clear that the company could not complete construction or meet the monthly interest payments under its loan agreement with the subordinate lenders. In September 2019, CWB ceased to advance funds to the company and demanded payment for $6.3 million. The company proposed to CWB that it would seek relief under the CCAA so that interim financing could be obtained to complete construction of the development for the benefit of all stakeholders. The Bowra Group was appointed monitor. Fasken is counsel to the company.
February 3, 2020
Grabhers Last Stand Bison Ranch, a Dawson Creek, British Columbia-based bison ranch, was placed in receivership on February 3 on application by the Bank of Nova Scotia, owed approximately $6.6 million. After the corporation defaulted under its loan agreements with BNS, BNS made demands for repayment of amounts owed under these agreements. To date, the corporation has failed to make any payments. BNS further alleges that the corporation withheld relevant information when applying for credit, and that the corporation engaged in uncooperative and potentially fraudulent conduct. For example, while the corporation's profit and loss statement for January - September 2019 indicates revenue generated of approximately $1.8 million, this amount was not deposited into the corporation's account with BNS. Furthermore, the corporation sold 430 heads of bison to a related corporation without informing BNS or receiving its consent for the transfer of assets. Deloitte was appointed receiver. MLT Aikins is counsel to the applicant.
February 3, 2020
Rebuts Solides Canadiens, a Montreal, Quebec-based waste disposal company, along with certain other related companies, obtained protection under the CCAA on February 3, attributing its liquidity issues primarily to the decline in the recyclable materials industry. In particular, as a result of China's new recycling ban, the value of recycled materials has dropped dramatically in recent years. The price per ton of mixed paper fell from $121 in mid-2017 to $34 in November 2019. The Quebec government has authorized a $7.0 million loan to the company. The Ministry of Sustainable Development, Environment, and Fight Against Climate Change will provide $5.0 million, while RECYC-QUÉBEC will provide the remainder of the loan. PwC was appointed monitor. Fasken is counsel to the company.