Our summaries of recent Canadian insolvency filings.
March 30, 2020
The Office de la protection du consommateur has appointed PwC as the administrator for claims filed with the Compensation Fund for Customers of Travel Agents ("CFCTA") in connection with the COVID-19 pandemic. Travellers who purchased tourism services such as accommodations, cruises, excursions, etc. from a travel agent licensed in Quebec are covered by the CFCTA's protection. The CFCTA may reimburse tourism services that have been paid for but not received. It may also be used to compensate customers who have had to extend their stay, in particular where their flight has been cancelled.
March 25, 2020
Penady (Barrie) Ltd ("PBL"), a Toronto, Ontario-based subsidiary of PenEquity Realty, a real estate investment advisor, and PRC Barrie were placed in receivership on March 25 on application by Choice Properties Limited Partnership ("CHP"), the beneficial owner of certain lands abutting real property owned by the companies (the "Barrie Property"). The Barrie Property is approximately 97% occupied, with tenants including Cineplex, Tim Hortons, and McDonald's. PBL, which has $68.2 million in liabilities, previously entered into a secured credit agreement with CHP to assist it with the development of the Barrie Property. During the course of this agreement, PBL defaulted on several occasions, including by missing payments. Although the agreement matured in January 2020, to date, all principal, interest, and other obligations under the agreement remain outstanding. The current monthly rent collected by PBL is insufficient to service its indebtedness and PBL has tried unsuccessfully to sell the Barrie Property for approximately 18 months. RSM was appointed receiver. Counsel is Osler for the applicant, Gardiner Roberts for the companies and Blaney for the receiver.
March 23, 2020
Accede Energy Services, a Lacombe County, Alberta-based integrated energy services company that provides oilfield equipment rentals and fire, safety, and medical aid services, was placed in receivership on March 23 on application by Sandton Credit Solutions Master Fund IV, owed approximately $28.8 million. In late 2016 and early 2017, Sandton took assignments of loans to the company from both ATB and Canadian Western Bank. The company had already defaulted on the loans prior to the assignments to Sandton, and additional defaults followed. As a result, and after a third forbearance agreement expired on February 14, 2020, Sandton issued a demand for repayment. FTI was appointed receiver. Cassels is counsel to the applicant.
March 19, 2020
Pure Global Cannabis (TSXV:PURE), which is engaged in the production and sale of cannabis products in Canada with its subsidiaries (collectively, "Pure Global Group"), obtained protection under the CCAA on March 19. Pure Global Group's primary assets are two real properties in Brampton, Ontario owned by its subsidiaries, 237A Advance and 237B Advance, on which the group's production and warehouse facilities are located (the "Brampton Properties"). In 2018, the company and its primary operating subsidiary, PureSine, issued secured debentures and entered into a collateral agency agreement with Cancor Debt Agency. A year later, the group's precarious liquidity situation caused it to miss a payment that was due under the debentures that the company had issued to certain debenture holders. The group also defaulted on its vendor take back-mortgages for the Brampton Properties. Without a stay of proceedings and interim financing, Pure Global Group will face a complete cessation of its operations. During the CCAA proceedings, Hillmount Capital will be providing DIP financing. EY was appointed monitor. Counsel is Weisz Fell Kour for the company, Osler for the monitor, Cassels for 2056706 Ontario in respect to 237A Advance, Keyser Mason Ball for Kozo Holdings in respect to 237B Advance, Chaitons for Cancor Debt Agency, and Fred Tayar & Associates for Hillmount Capital.
March 12, 2020
Bolt Offsite, a Calgary, Albert-based designer and developer of modular building construction projects, was placed in receivership on March 12 on application by RBC, owed approximately $1.8 million. Since October 2019, RBC has continued to informally forbear from taking any enforcement steps while the company searched for replacement financing, but these efforts have been unsuccessful. KPMG was appointed receiver. Counsel is Osler for the receiver and Torys for RBC.
March 11, 2020
Green Relief, a Hamilton, Ontario-based cannabis producer, filed an NOI on March 11, listing approximately $9.7 million in liabilities, including $1.0 million to Cannoleum and $1.9 million to Schilthuis Construction. In early 2019, the company's co-founder and CEO stepped down, and a subsequent forensic investigation initiated by new management revealed that over $14.0 million had allegedly been misappropriated, and the company is now facing a severe liquidity crisis. PwC is the proposal trustee. Counsel is TGF for the company and DLA Piper for the proposal trustee.
March 10, 2020
Spectra Premium Industries, a Boucherville, Quebec-based company that specializes in the design, manufacturing, and distribution of cooling systems and other automotive products, together with several of its subsidiaries (collectively, the "Spectra Group"), obtained protection under the CCAA on March 10, listing approximately $249.0 million in liabilities, including $102.9 million to Wells Fargo and $20.7 million to Laurentian Bank. Over the past few years, the Spectra Group has seen a progressive reduction of its profitability. For the year ended January 31, 2020, the Spectra Group suffered a loss of more than $13.0 million. The group attributes its financial difficulties primarily to a shift in customer demand towards aftermarket products that are cheaper; an oversupply of certain products in the US market and increased costs as a result of the tariffs imposed on goods imported from China. EY was appointed monitor. Counsel is Norton Rose Fulbright for the monitor, Lavery, de Billy for the Spectra Group, Bennett Jones and Fishman Flanz Meland Paquin for Wells Fargo, and McCarthy Tétrault for Laurentian Bank.
March 9, 2020
Nygard Properties, Nygard Enterprises, Nygard International Partnership, 4093887 Canada, and 4093879 Canada (collectively, the “Nygard Group”), a Winnipeg, Manitoba-based clothing brand, each filed an NOI on March 9. Last month, the company's founder and chairman, Peter Nygard, agreed to step down from his company and divest his ownership interest after an FBI raid of the company's New York headquarters and news that a class action lawsuit had been launched against him for alleged sexual assault. Farber is the proposal trustee.
March 9, 2020
Nygard Group, a Winnipeg, Manitoba-based clothing brand, was placed in receivership on March 18 on application by White Oak Commercial Finance, owed approximately $25.9 million (USD). The entities within the Nygard Group had each filed an NOI on March 9 but the automatic stay of proceedings did not apply to White Oak, which had issued its Notice of Intention to Enforce Security more than 10 days prior. In breach of several conditions under its credit agreement, the Nygard Group has lost the trust of its lenders. White Oak alleges that it has not been receiving timely or accurate information, and several significant decisions were recently made by the group without White Oak's consultation, including the decision to close its retail stores, distribution centres and website. The proposal trustee too has only received limited information, leading it to conclude that it was not in a position to advise that the group was acting with good faith or due diligence. Richter was appointed receiver. Counsel is Pitblado and Osler for the applicant and Thompson Dorfman Sweatman for the receiver.
March 6, 2020
FHC Enterprises, a Vancouver, British Columbia-based company which operates the FIELDS chain of 64 retail stores located in rural communities throughout Western Canada, filed an NOI on March 6, listing $17.5 million in liabilities, including $8.9 million to RBC. The company attributes its financial difficulties to a failure to respond quickly to increasing minimum wage costs and increased carbon taxes. In addition, several of the company's stores have been affected by the downturn in retail and the economies in Alberta and Saskatchewan. MNP is the proposal trustee. Counsel is MLT Aikins for RBC and Gehlen Dabbs for the company.