Our summaries of recent Canadian insolvency filings.
May 5, 2021
BioÉnergie AE Côte-Nord Canada Inc., which is a joint venture founded in 2012 between Biogaz SP S.E.N.C. and Ensyn BioEnergy Canada Inc. for the construction and operation of a biofuel factory in Port-Cartier, Quebec, obtained protection under the CCAA on May 5. Construction of the factory has been negatively affected by several delays and cost overruns. While most of the construction of the factory is now completed, it still does not have the capacity to produce biofuel in the volumes and level of quality provided for in various contracts. As a result of these operational issues, there is ongoing litigation between certain parties regarding who should pay for the costs of rectifying the defects that are preventing the plant from operating as intended. Raymond Chabot was appointed monitor. Counsel is Miller Thomson for the BioÉnergie AE Côte-Nord Canada Inc., Woods for Biogaz SP S.E.N.C., and BLG for Ensyn BioEnergy Canada Inc.
April 30, 2021
YG Limited Partnership and YSL Residences Inc., which are part of the Cresford Group of Companies ("Cresford") and are the owner/developer of the condominium project known as Yonge Street Living Residences (the "YSL Project"), at the intersection of Yonge Street and Gerrard Street in Toronto, filed NOIs on April 30. YG Limited Partnership lists approximately $64.1 million in liabilities, including $111.8 million to Westmount Guarantee, and YSL Residences Inc. owes approximately $106.8 million to Timbercreek Mortgage Servicing Inc. The YSL Project, which is currently subject to three mortgages totalling $249 million, has been suspended for more than a year due to ongoing financial difficulties of the companies and Cresford. If the NOI proposal is implemented, Concord Properties Development Corp. or its affiliate would become the owner/developer of the YSL Project. KSV Advisory is the proposal trustee. Counsel is Aird & Berlis for the companies, Davies for the proposal trustee, and Bennett Jones for the Concord Properties Development Corp.
April 30, 2021
Bridging Finance Inc. ("BFI"), a Toronto, Ontario-based investment management firm with approximately $2 billion in assets under management, as well as various investment vehicles managed by the firm (the "BFI Funds"), were placed in receivership on April 30, 2021, on application by the Ontario Securities Commission ("OSC"). BFI is registered with securities regulators in all provinces and territories in Canada as a restricted portfolio manager and an exempt market dealer. The Enforcement Staff of the OSC is conducting an ongoing confidential investigation centred around allegations that BFI and certain of its officers, directors, and shareholders have: appropriated amounts from the BFI Funds for personal gain; mismanaged the BFI Funds, including by failing to disclose material conflicts of interest; breached numerous securities laws and regulations, including by misleading Enforcement Staff; and failed to act in the best interests of the Respondents’ stakeholders. As such, the OSC sought and was granted a receivership order pursuant to section 129 of the Ontario Securities Act. PwC was appointed receiver.
April 26, 2021
WA Grain & Pulse Solutions, an Innisfail, Alberta-based company in the business of grain processing for human and pet food consumption, with facilities in Alberta, Saskatchewan, and PEI, was placed in receivership on April 26 on application by ATB Financial (the "Lender"). The company lists a total of $24.6 million in liabilities, including $11.9 million to the Lender, $8 million to Avrio Subordinated Debt Limited Partnership II ("Avrio"), and $4.7 million to Farm Credit Canada. Pursuant to a commitment letter, the Lender made several loans to the company, including an operating loan facility of up to $10 million (the "Loans"). In 2018, the Lender's turnaround and restructuring group ("TRG") began monitoring the Loans due to the company's poor financial performance and history of requiring financial covenant waivers. Despite several attempts by the company to improve its financial performance, TRG has had to continually monitor the Loans. In April, the company experienced several further setbacks: first, police were called to the company to investigate a theft of more than $200 thousand worth of equipment; second, the Canadian Grain Commission suspended the company's license after the company was unable to pay $6.5 million for unpaid inventory before April 23. Without this license, the company cannot operate its grain business. BDO was appointed receiver. Counsel is MHR Law for the company, Fasken for the Lender, MLT Aikins for the receiver, and McCarthy Tétrault for Avrio.
April 26, 2021
Coalspur Mines (Operations) Ltd., a Hinton, Alberta-based coal development company which owns and operates the Vista Coal Mine Project, filed for CCAA protection on April 26, 2021. While the company’s operations have significant value, with Phase I alone having the capacity to produce roughly 6.5 million tonnes of clean coal per year, Coalspur’s ability to conduct its business and generate revenue and liquidity has been severely impacted by: (a) the shut down of the mine in February 2021 as a result of a permitting issue with the Alberta Energy Regulator ("AER"), thereby suspending all coal production and cutting off Coalspur’s only source of revenue; and (b) the simultaneous crystallization of an approximately $59.9 million USD hedge obligation to Trafigura Lte. Ltd. following the rapid escalation in global coal prices in late 2020. Coalspur has now resolved the permitting issue with the AER and received approvals to restart mining operations. However, Coalspur lacks sufficient funding to restart the Project and begin producing coal because of the depletion of its coal inventory and the loss of all revenue since January 2021. FTI was appointed monitor. Counsel is Osler for the company and Blakes for the monitor.
April 23, 2021
Sanling Energy Ltd., an oil and gas company with licences to operate 2,279 wells, 2,170 pipelines and 267 other facilities across Alberta, and 94 well permits, 94 facility permits and 53 pipeline permits for infrastructure located in British Columbia, was placed in receivership on April 23, 2021, on application by the Orphan Well Association ("OWA") and the British Columbia Oil and Gas Commission ("BC OGC"). The AER and the BC OGC issued several escalating orders to the company regarding its non-compliance with reclamation obligations, abandonment orders and a number of regulatory infractions. On February 1, 2021, the BC OGC suspended the company's permits, and on March 4, 2021, the AER ordered that the company shut in all of its assets subject to AER licences. As of April 15, 2021, the company has estimated deemed liabilities of approximately 67.6 million owing to the b and approximately 2.8 million owing to the BC OGC. PwC was appointed receiver. Counsel is MLT Aikins for the OWA and the BC OGC.
International Fitness Holdings Inc., International Fitness Holdings LP, and World Health North LP (collectively, the “Company”)
April 23, 2021
International Fitness Holdings Inc., International Fitness Holdings LP, and World Health North LP (collectively, the “Company”), which operates 21 fitness clubs, as well as spin and CrossFit studios, in Calgary and Edmonton, filed an NOI on April 23, 2021. As at March 31, 2021, the company owed approximately $72.9 million to its two main secured lenders, CIBC and Trifit Holdings (GP) Ltd. (the company's general partner). Subsequent to the Alberta Government’s decision to increase COVID-related restrictions, the Company closed all its clubs and laid off a significant number of employees in mid-March 2020 and implemented a number of strategies to attempt to safeguard the longer-term operations including negotiating rent deferrals with landlords and accessing the Canada Emergency Wage Subsidy and the Canada Emergency Commercial Rent Assistance and Canada Emergency Rent Subsidy programs. In September of 2020, the Company engaged MNP to lead a strategic process, including a sale of the Company’s assets. This culminated in an asset purchase agreement being entered into between the Company and an arm's-length purchaser that will be finalized while the Company is under creditor protection. KPMG was appointed as proposal trustee. Counsel is Osler for the proposal trustee.
April 22, 2021
People Express Transport Ltd., a Calgary, Alberta-based trucking and transportation company, was placed in receivership on April 22 on application by RBC, owed approximately $10.7 million. Back in February 2021, RBC had sought the appointment of a receiver over the company's property and assets. However, the application was adjourned in order to allow the parties to negotiate an arrangement under which the company was given time to find refinancing and RBC would have access to additional reporting and transparency into the company's business affairs. During this period, Alvarez & Marsal was appointed as private monitor (the "Monitor") in order to obtain and analyze a variety of information on the company's affairs. However, RBC alleges that the company failed to fully comply with the Monitor's diligence and documentation requests and, although it has had adequate time and opportunity to obtain alternate financing, it has not done so. In addition, RBC expressed its concern that the company was not acting in good faith and was diverting receivables out of RBC's control to accounts that the company holds with other banks. Alvarez & Marsal was appointed receiver. Counsel is McLeod Law for the company, Torys for the receiver and Cassels for the applicant.
April 21, 2021
Tetu Island Lodge, which is the registered owner and operator of a seasonal hunting and fishing lodge on Tetu Lake, Ontario (the "Property"), was placed in receivership on April 21 on application by BDC, owed approximately $534.6 thousand. Since the majority of guests who attend the lodge are from the US, there has been minimal income in the last year as a result of the continuing border closure between Canada and the US. The owners of the lodge are also American and the travel restrictions have not allowed them to attend the lodge to operate the facility. BDC claims that the company has not made any of the required payments under their loan agreement and that the company refuses to provide any financial information or disclosure to the BDC. Currently, it appears that the company has ceased operating and has since abandoned the Property. However, because the Property is inaccessible by road, BDC has been unable to confirm whether there is a risk to the company's equipment and buildings located on the Property, which are the assets over which BDC has security. MNP was appointed receiver. Soloway Wright is counsel to the applicant.
April 19, 2021
2624827 Ontario Inc., a Brampton, Ontario-based company, had its property municipally known as 105 Main Street in Parkhill, Ontario (the "Mortgaged Property") placed under receivership on April 19 on application by C & K Mortgage Services Inc., owed approximately $2.1 million under a loan between the parties (the "Loan"). The Mortgaged Property consists of a .47 acre parcel upon which an Esso station with a small convenience store and vacant restaurant previously operated. Due to a fuel shortage and insufficient funds to replenish the fuel inventory, the gas station was eventually shut down. The Loan is currently in financial default and the applicant has not received any payments since January 12, 2021. Rosen Goldberg was appointed receiver. Dickinson Wright is counsel to the applicant.