Our summaries of recent Canadian insolvency filings.
July 12, 2019
MF Live Inc., a Saskatchewan-based company organizing the Roxodus Music Fest, filed for bankruptcy on July 12, listing $18.3MM in liabilities, including $11.2MM to Taurus Site Services and $5.0MM to Eventbrite. The company was organizing a four-day concert to be held from July 11 to 14 on a 420-acre space near Wasaga Beach, Ontario. Featured groups slated to perform at the event included Aerosmith, Kid Rock, Nickelback and Lynyrd Skynyrd, among others. Just days prior to the festival, however, the company announced that it was cancelling the event, citing tremendous rainy weather that impacted its ability to adequately prepare the venue for the event. It has also come to light that the company is under investigation from the local conservation authority for allegedly destroying protected forest and wetlands in preparation for the festival. Grant Thornton is the bankruptcy trustee. BT Legal is counsel for the company.
July 11, 2019
Miniso Canada, the Canadian-based retailer of Miniso, a global retail brand ("Miniso Global"), obtained protection under the CCAA on July 11. Launched in 2017, the Canadian company has grown to 67 stores across the country, operating under a license agreement with Miniso Global. A dispute arose in the fall of 2018 over the quantum of debt owed to Miniso Global which led to Miniso Global demanding repayment and filing a bankruptcy application against its Canadian partner. A forbearance agreement was ultimately reached in January 2019 between the parties that required Miniso Canada to, among other things, enter into good faith negotiations for the sale of the Canadian operations to Miniso Global. A transaction never transpired, and when the forbearance agreement expired on June 25, repayment was again demanded. Rather than appointing a receiver, Miniso Global elected to make an application for CCAA protection for the Canadian company so as to maintain enterprise value. Alvarez & Marsal was appointed monitor and has been given enhanced powers to manage the Canadian operations during the proceedings while a restructuring transaction is pursued. Counsel is Fasken for Miniso Global, McMillan for Miniso Canada and Dentons for the monitor.
July 7, 2019
ILTA Grain, a Surrey, British Columbia-based grain producer, filed for protection under the CCAA on July 7, listing $149.5MM in liabilities. Founded in 2011, the company has become one of the two largest processors of quality grains in Canada, operating from six state-of-the-art facilities in Saskatchewan. As part of its growth strategy, the company has made significant efforts to export its products internationally. Over the past few years, however, the company has faced increasingly challenging international trade conditions as countries such as India, China and Saudi Arabia have decided to limit, and in some cases, entirely discontinue their Canadian imports. The reduction in international sales, coupled with a highly leveraged balance sheet, has left the company without the working capital necessary to fund operations and service its debt. While under creditor protection the company will explore its strategic alternatives, including conducting a sale and investment solicitation process. PwC was appointed monitor. Stikeman Elliott is counsel for the company.
July 3, 2019
Quinsam Coal Corporation, a company which owned and operated a coal mine on Vancouver Island, British Columbia, filed for bankruptcy on July 3. The company produced high-quality thermal coal that was sold to the cement industry in British Columbia and to international cement and power-generating customers around the Pacific Rim. Due to a prolonged and steep decline in thermal coal prices, changes in market demand and a decline in productivity of the mine the company ran out of funding to continue operations. The mine ceased operating and was put into care and maintenance at the end of May 2019. The principal objective of the trustee is to attempt to sell and realize on the company's assets and to work with the province to facilitate the wind up and remediation of the mine. PwC was appointed trustee. Counsel is McMillan for the company and Cassels Brock for the trustee.
June 25, 2019
Voice Construction, an Edmonton, Alberta-based civil construction company, was placed in receivership on June 25 on application by Maynbridge Capital, owed approximately $35.9MM. Maynbridge, which took an assignment of the company's loan from a syndicate of lenders in January 2019, has been working with the company on the terms of a transaction that would address the company's immediate liquidity needs and improve its capital structure. Although negotiations continued to progress, by mid-June 2019 the company's liquidity position deteriorated to the point that an injection of capital was required in the immediate term. The company instead took steps to wind down its business operations, terminating staff and advising customers of the wind-down of its business. Fearing that the company's equipment would be exposed to potential possessory liens of trade contractors, Maynbridge sought the appointment of a receiver to preserve and realize on the assets in an orderly manner. Alvarez & Marsal was appointed receiver. Counsel is BLG for the applicant, Osler for the company and Miller Thomson for the receiver.
June 24, 2019
Alaskan Water Seafood, a Brampton, Ontario-based seafood supplier was placed in receivership on June 24 on application by RBC, owed approximately $1.0MM. In March 2019, the accounts of the company were transferred to RBC's special loans group because its risk profile had deteriorated. RBC expressed concerns about, among other things, improprieties with respect to the completion of borrowing base certificates and late reporting. The company acknowledged its financial difficulties, which it attributed to rising competition, but its attempts to refinance its business and/or attract an equity partner have been unsuccessful and recent information provided to RBC has increased the bank's concerns about the deteriorating financial position of the company. Grant Thornton was appointed receiver. Counsel Minden Gross for the applicant and KMB Law for the company.
June 21, 2019
United Construction Company, an Acheson, Alberta-based general contractor, was placed in receivership on June 21 on application by Trisura Guarantee Insurance Company, owed approximately $2.7MM. Trisura, the company's surety on projects throughout Alberta, has been called upon to make payments to subcontractors, suppliers and labourers on various bonded projects. The company filed an NOI on June 6, with EY acting as proposal trustee, in response to Trisura's formal demand for repayment on May 29, but the stay has been lifted and a receivership order granted in favour of Trisura. Grant Thornton was appointed receiver. Counsel is Field Law for the applicant, McMillan for the receiver, Sharek & Co for the company and Dentons for TD.
June 20, 2019
Homes By Design, a company developing and constructing a 3 storey, 26 unit residential condominium complex with underground parking in Perth, Ontario, was placed in receivership on June 20, on application by HarbourEdge Mortgage Investment Corporation, owed approximately $28.8MM. The company was unable to repay its loans to HarbourEdge and the Court appointed Fuller Landau as receiver for the purpose of developing and carrying out a marketing and sales process for the property. Counsel is Victor Vandergust Professional Corporation for the applicant and Minden Gross for the receiver.
June 17, 2019
Flexcavators Canada, a Calgary, Alberta-based distributor of innovative excavation equipment and accessories, filed for bankruptcy on June 17, listing $487.0M in liabilities, including $115.6M to BDC. Grant Thornton is the bankruptcy trustee.
June 17, 2019
Station Point Developments, a company developing and constructing a 112 unit rental residential apartment in Edmonton, Alberta, was placed in receivership on June 17 on application by Kingsett, owed approximately $11.9MM. Construction of the project commenced in 2016 but has been plagued by a host of problems including being behind schedule, cost overruns, builders' liens being registered against the property and a litigious dispute between the developer and its general contractor, Fortis LGS Structures. The company was unable to repay its loan to KingSett when it matured in February 2019 and KingSett is unwilling to fund the estimated $6.9MM that is required to complete the project without the appointment of a trustee who has the ability to obtain construction advances from KingSett on a secured and first priority basis. KSV was appointed receiver. Counsel is McCarthy Tétrault for the applicant and Bennett Jones for the receiver.