Our summaries of recent Canadian insolvency filings.
February 17, 2021
TGF Acquisition Parent Ltd., Sun Rich Fresh Foods Inc. and Tiffany Gate Foods Inc., British Columbia companies which are part of a larger group known as the Fresh Food Group (the "Group"), filed for protection under the CCAA on February 17, listing in excess of US$150,000,000 in liabilities, including US$119,000,000 to Cortland Capital Market Services LLC, as administrative agent to various lenders. The Group, which includes several US entities that filed for Chapter 11 protection on February 15, is a leading provider of branded and private-label offerings of fresh-cut fruits and vegetables, ready-to-go meals and meal kits, behind-the-glass salads, and other products. In 2019, the Group faced significant liquidity and other economic pressures, forcing it to implement certain strategic measures, including entering into an exchange transaction to restructure its indebtedness with its then existing lenders. Despite the exchange transaction, the Group has continued to face significant financial challenges in the context of its business operations, most recently due to economic pressures caused by the COVID-19 global pandemic. More specifically, in 2020, the demand for the Group’s largest product segments, fruits and vegetable trays, significantly declined as consumer habits began to change, and as the various federal, provincial and state governments in both Canada and in the US began imposing various sanitary measures and restrictions to prevent or limit the spread of the COVID-19 virus. These issues, combined with production and supply chain issues, have significantly affected the Group's liquidity position throughout 2020. EY was appointed monitor. Counsel is Stikeman Elliott for the companies and TGF for the Monitor.
February 12, 2021
JD Norman Canada, ULC, a Windsor, Ontario-based manufacturer of highly engineered metal components for the automotive industry, was placed in receivership on February 12 on application by Callidus Capital Corporation ("Callidus"), owed approximately $146.0 million (USD). The company's largest customer, General Motors ("GM"), representing close to 100% of its business, terminated its business relationship with the company and, as such, the company is no longer able to operate as a viable going concern. In January 2020, the company indicated to GM that it was experiencing severe financial difficulty and would be unable to remain in business without obtaining certain financial accommodations from GM and Callidus. Subsequently, GM entered into an agreement with the company and Callidus in which GM agreed not to resource any of GM's business to a different supplier until at least February 2023. However, in November 2020, after GM claimed that the company had breached its obligations under this agreement, GM notified the company of its intention to resource a substantial portion of GM's business to a new supplier. KSV Advisory was appointed receiver. Counsel is McMillan for the company, Dickinson Wright for the applicant, Osler for the receiver, and Norton Rose for Bank of America, the operating lender.
February 11, 2021
Calgary Oil & Gas Syndicate Group Ltd., a Calgary, Alberta-based producer of natural gas and natural gas liquids, along with various other related entities (collectively, the "Group"), filed for protection under the CCAA on February 11, 2021, listing approximately $42.89 million in liabilities, including approximately $27 million to Crown Capital Partner Funding, LP. As a junior energy producer, the viability of the Group's business operations is highly dependent upon oil and gas commodity pricing. As such, the Group has been significantly impacted by challenging market conditions in the Canadian oil and gas industry, including the protracted depressed oil and gas pricing, as well as market volatility due to several factors such as the COVID-19 pandemic. BDO was appointed monitor. Counsel is BLG for the Group and MLT Aikins for Crown Capital Partner Funding, LP.
February 8, 2021
Services Clean d'Oeil Inc., a Saint-Augustin-de-Desmaures, Quebec-based cleaning services company for residential and commercial buildings, serving notably clients in the hotel industry, filed an assignment in bankruptcy on February 8, 2021. In 2019 and 2020, the company acquired material and equipment to develop an expertise in commercial laundry services to be offered to its clients in the hotel industry. The recent pandemic and downturn in the hotel industry forced the company to cease its operations at the beginning of 2021. PwC was appointed bankruptcy trustee. Counsel is McCarthy Tétrault for CIBC, the secured lender, and Langlois Avocats for the trustee.
February 8, 2021
Rockshield Engineered Wood Products ULC, a Cochrane, Ontario-based manufacturer of plywood used to make a variety of products including furniture and cabinetry, filed an NOI on February 8, listing approximately $15.1 million in liabilities, including $2.9 million to BNS. Due to the seasonal variations in logging roads and poor transport truck access during the warmer months, the company purchases the majority of its raw materials in the winter. During the winter months, the company stockpiles approximately $100.0 thousand worth of logs per week over and above its manufacturing needs. Since the company's expenses during the stockpiling period exceed its revenue from operations, it has historically financed this "bulge" with capital from shareholders. This year, however, the company's shareholders have declined to extend financing for the bulge. In addition to the company's pending liquidity crisis, BNS has issued a demand on its credit facilities, asserting a breach of a debt service ratio covenant. During these proceedings, BNS is providing DIP financing to the company. Dodick & Associates is the proposal trustee. Counsel is Weisz Fell Kour for the company, Pallett Valo for the proposal trustee and Miller Thomson for BNS.
February 4, 2021
T-Rex Contracting Inc., a Leduc, Alberta-based construction company, along with various other related entities (collectively, the "T-Rex Entities"), were placed in receivership on February 4 on application by BMO, owed approximately $1.29 million. As a result of various events of default under the loan agreements entered into by the T-Rex Entities, BMO demanded repayment of its indebtedness. To date, the T-Rex Entities have refused or neglected to make any payments. Grant Thornton was appointed receiver. Counsel is Dentons for the applicant and Cassels for the receiver.
February 1, 2021
Tradesmen Enterprises Limited Partnership ("TELP"), a Calgary, Alberta-based limited partnership that provides general mechanical contracting and pipeline construction, assembly, and maintenance throughout Western Canada — along with its general partner, Tradesmen Enterprises Inc. (together with TELP, "Tradesmen") — filed NOIs on February 1. Tradesmen lists approximately $47.7 million in liabilities and $52.5 in assets. Until January 11, 2021, Tradesmen's principal contract was for the construction of a water management project for Teck Coal Limited (the "Project"). The Project was massively over budget, with the final projected cost of completion being more than four times the original budget of $32.0 million. In the course of Tradesmen's work on the Project, Teck Coal Limited also consistently delayed payment, which had a negative impact on Tradesmen's cash flow and its ability to pay subcontractors. Teck Coal Limited, which currently owes Tradesmen approximately $50.0 million, purported to terminate the contract on January 11, 2021. As a result, Trademen's only alternative was to seek court protection by filing the NOIs. KSV Restructuring is the proposal trustee. Counsel is Bennett Jones for the proposal trustee, Lawson Lundell for Tradesmen, and BLG for BMO, the senior lender.
February 1, 2021
Laurentian University, a public university located in Greater Sudbury, Ontario with over 8,000 students, filed for protection under the CCAA on February 1, listing approximately $321.8 million in liabilities, including $71.6 million to RBC, $18.4 to TD, and $1.3 to BMO. The University cited widening deficits, declining enrolment, and costs related to the COVID-19 pandemic for its financial difficulties. Since the 2014-2015 fiscal year, the University has experienced operational deficits in the millions of dollars each year. With the exception of modest growth experienced in 2020, enrolment has declined each year from 2015 to 2018 and tuition fees remain low, while labour and debt servicing costs have grown substantially. The annual cost to educate each student at the University is approximately $2,000 higher than the average cost when compared to other Ontario universities, and there are far more faculty members than required. Although the University has made efforts to reduce administrative costs, this has resulted in a situation in which the reduced administrative staff has limited ability to focus on potential revenue-generating projects. As part of its efforts to address these operational and financial issues, the University intends to reduce the number of departments and programs it will offer, which cannot be accomplished in a timely manner outside of a CCAA proceeding. Since the University — as a publicly-funded entity — is subject to information requests, it will also be seeking an order that the stay of proceedings also suspends the requirement that the University respond to such information requests during the duration of the CCAA proceedings. During these proceedings, the University will be receiving up to $25.0 million in DIP financing from Firm Capital Mortgage Fund Inc. EY was appointed monitor. Counsel is TGF and Hicks Morley (labour counsel) for the University, Stikeman Elliott for the monitor, Fogler Rubinoff for the DIP lender, Blakes for RBC, Fasken for TD, and Chaitons for BMO.
January 29, 2021
Kanwal Inc., which is part of an international corporate group based in Magog, Quebec, whose commercial operations include the production of specialty rubber and plastic automotive sealing systems, filed for protection under the CCAA on January 29, 2021, listing approximately $21.6 million in liabilities, including $12.2 million to First West Capital Union and $4.3 million to BMO. In July 2020, the company filed an NOI under the Bankruptcy and Insolvency Act (the "BIA"). Despite multiple extensions of time for filing a proposal, the company was unable to make a proposal to its creditors before the deadline to do so expired on January 30, 2021. As such, the company sought an order authorizing the BIA proceedings to continue under the CCAA. In the longer term, the company is confident that the CCAA proceedings will permit it to complete a proposed senior secured asset-based financing with Waygar Capital Inc. PwC was appointed monitor. Woods is counsel to the company.
January 28, 2021
Beaver Lake Resources Corporation, a Calgary, Alberta-based exploration and production company, filed for bankruptcy on January 28, listing approximately $889.8 thousand in liabilities and approximately $nil in realizable assets. Grant Thornton is the bankruptcy trustee.