Our summaries of recent Canadian insolvency filings.

Robus Resources Inc.

April 12, 2022

Filing Type:

Company Counsel: Gowlings

Trustee: A&M

Trustee Counsel: Cassels

Applicant: Robus Services LLC

Applicant Counsel: BDP Law

Industry:

Province:

Robus Resources Inc., a Calgary, Alberta-based oil and gas company with property and operations in Alberta,was placed in receivership on April 12 on application by Robus Services LLC, its senior secured creditor. In February 2020, Robus Services LLC extended a loan to the company in the principal amount of USD $7 million. As at the end of January, the total debt outstanding to Robus Services LLC was almost USD $15 million. A&M was appointed receiver. Counsel is BDP Law for Robus Services LLC; Cassels for the receiver; and Gowlings for the company and Ernst Methot.

By Dina Milivojevic

Filing Type:

Trustee: FTI

Trustee Counsel: Osler

Applicant: National Bank of Canada ("NBC")

Applicant Counsel: MLT Aikins

Industry:

Province:

Balanced Energy Oilfield Services Inc., Balanced Energy Oilfield Services (USA) Inc., and Balanced Energy Holdings Inc., which provided coil tubing and other services to the oil and gas sector, was placed in receivership on March 7, on application by National Bank of Canada ("NBC"), owed approximately $24.7 million. NBC, along with the receiver and a new entity incorporated by one of the former principals of the companies, has negotiated a term sheet which contemplates the sale of certain of the companies' assets and equipment. NBC supports the proposed transaction, and the receiver intends to seek approval of the transaction in due course. FTI was appointed receiver. Counsel is MLT Aikins for NBC, Osler for the receiver, Bennett Jones for XDI Energy Solutions Inc. and TGF for Laurentian Bank of Canada.

By Dina Milivojevic

Filing Type:

Company Counsel: DLA Piper

Trustee: Deloitte

Industry:

Province:

915245 AB Ltd. O/A Prairie Tech Oilfield Service, an Elk Point, Alberta-based oilfield transportation provider, filed an NOI on February 25. The company lists various liabilities, including various yet unvalued secured claims and dozens of unsecured claims, including approximately $1.26 million to the Cornerstone Co-operative. Deloitte is the proposal trustee. Counsel is DLA Piper for the company.

By Dina Milivojevic

Abbey Resources Corp.

February 28, 2022

Filing Type:

Company Counsel: DLA Piper

Trustee: MNP

Trustee Counsel: McDougall Gauley

Applicant: Minister of Energy and Resources (the “Ministry”)

Industry:

Province:

Abbey Resources Corp., a Calgary, Alberta-based owner and operator of over 2,000 shallow gas wells in Swift Current, Saskatchewan, was placed in receivership on February 28, on application by various municipalities with taxes owing and the Government of Saskatchewan, as represented by the Minister of Energy and Resources (the “Ministry”). The company was previously granted CCAA protection on August 13, 2021. On December 6, 2021, a risk assessment report was provided to the Ministry raising significant deficiencies with respect to certain wells, and the Ministry issued an order suspending the licences of all high and very high-risk pipelines and requiring the company to cease operations of these pipelines by shutting them in. MNP was appointed receiver. Counsel is DLA Piper for the company, McDougall Gauley for the receiver, Robertson Stromberg for the Minister, Miller Thomson for the Rural Municipality of Lacadena No. 28, Kanuka Thuringer for the Rural Municipality of Miry Creek No. 229 and MLT Aikins for Carry the Kettle Nakoda Nation Band No. 76.

By Dina Milivojevic

Vertex Downhole Ltd.

February 4, 2022

Filing Type:

Company Counsel: Burnet, Duckworth & Palmer

Trustee: MNP

Trustee Counsel: Dentons

Industry:

Province:

Vertex Downhole Ltd., a Calgary, Alberta-based integrated oil and gas service company, filed an NOI on February 4. The company primarily designs, develops, sells and rents drilling and other downhole tools for use in the oil and gas exploration industry. It has three wholly-owned US subsidiaries and employs 28 individuals in Canada and seven individuals in the US. The COVID-19 pandemic and the resulting global decline in oil and gas prices and exploration activities and disruptions in the supply chain resulted in increased liquidity risk to the company, challenged its ability to enter into customer contracts in a timely manner and negatively impacted the company’s business and operational results. On January 26, HSBC, the company’s largest secured creditor, issued a demand under section 244 of the BIA. As the company was unable to negotiate an agreement with HSBC prior to the expiry of the 10-day notice period, it determined that an NOI filing was necessary to restructure the business. On March 4, the company was granted permission to conduct a SISP. Grant Thornton was initially the proposal trustee, but was replaced by MNP to build consensus between the company and HSBC by giving effect to HSBC’s desire that MNP act as proposal trustee. Counsel is Burnet, Duckworth & Palmer for the company, Faskens for HSBC, Cassels for Grant Thornton, and Dentons for MNP.

By Dina Milivojevic

Big Bear Energy Rentals Ltd.

January 21, 2022

Filing Type:

Company Counsel: DLA Piper Canada

Trustee: Alvarez & Marsal

Trustee Counsel: BLG

Applicant: Canadian Western Bank ("CWB")

Applicant Counsel: Miller Thomson

Industry:

Province:

Big Bear Energy Rentals Ltd., a Sylvan Lake, Alberta-based service company operating in the Western Canada oil & gas and civil engineering industries, along with certain other related companies including Barricade Environmental Ltd. with operations in Wyoming, North Dakota and Texas, was placed in interim receivership on January 21 on application by Canadian Western Bank ("CWB"), owed approximately $10.3 million. Business Development Bank of Canada (“BDC”) is also owed approximately $9 million with respect to an equipment loan. Upon its appointment, the interim receiver found what it described as an accounting department plagued with departures and leaves. The company's accounting manager had recently taken a medical stress leave which, according to an email uncovered by the interim receiver, was due to “the directive by upper management of the manipulation of the Big Bear & Barricade financial statements, and the deterioration of respect and leadership with the accounting team …” The interim receiver's initial report further notes that the accounting manager advised that she would typically be instructed by senior management to post unsupported accounts receivable and accounts payable transactions, resulting in higher borrowing values, which allowed the company to draw larger amounts under the CWB facility. She advised that this was also done with the company’s previous banker. According to the interim receiver, it has uncovered $5.9 million in receivables that have been confirmed by accounting personnel to be fictitious, $1.5 million in backdated invoices and $2.3 million in payables which accounting personnel have confirmed to be fictitious and posted to keep the company's profit margin in line with historical financials. Alvarez & Marsal is the interim receiver. Counsel is Miller Thomson for the applicant, BLG for the interim receiver, Cassels for BDC and DLA Piper Canada for Big Bear and related companies.

By Dina Milivojevic

Kaisen Energy Corp.

December 8, 2021

Filing Type:

Company Counsel: MLT Aikins

Trustee: EY

Trustee Counsel: Norton Rose

Industry:

Province:

Kaisen Energy Corp., a Calgary, Alberta-based upstream oil and gas company, obtained protection under the CCAA on December 8. Due to the impacts of COVID-19 and significant commodity price volatility, Kaisen was obligated to shut-in a significant portion of its operations to reduce costs, and its production dropped significantly before eventually rebounding to approximately 50% production capacity in November 2021. In addition to these operational challenges, Kaisen: (a) suffered material losses in 2018 and 2019 in connection with a hedging plan it then had in place, and (b) has had its credit facilities significantly reduced by its senior secured lender resulting in its available credit decreasing from $5.5M in Q4 2017 down to $1.85M in Q4 2020. EY was appointed monitor. Counsel is MLT Aikins for the company and Norton Rose for the monitor.

Filing Type:

Company Counsel: Bennett Jones

Trustee: Grant Thornton

Applicant: Tallinn Capital Energy Corp.

Industry:

Province:

Elcano Exploration Inc., Elcano Exploration Ltd. & Elcano Energy Partnership, Calgary, Alberta-based oil and gas companies, were placed in receivership on November 24, on application by Tallinn Capital Energy Corp., owed over $6 million. It appears that Tallinn intends to make a credit bid for the companies' Manitoba assets in the receivership proceedings. The companies did not oppose the receivership application, but sought approval of an order permitting the receiver to execute an RVO term sheet and market an RVO transaction being proposed by the companies, which would be funded by their outside investor. The receivership order granted does not appear to address the relief sought by the companies, and no endorsement appears to have been released at this point. Grant Thornton was appointed receiver. Counsel is Bennett Jones for the companies.

Filing Type:

Trustee: FTI

Applicant: PwC

Applicant Counsel: DLA Piper

Industry:

Province:

CUDA Energy Inc., CUDA Oil and Gas Inc., CUDA Energy LLC and Junex Inc. (collectively, "CUDA"), a Calgary, Alberta-based group of oil and gas companies with assets in Alberta and the State of Wyoming, had a receiver appointed on November 18, on application by PwC as receiver of Bridging Finance Inc. ("Bridging"), owed approximately $57 million. Bridging has been providing financing to CUDA since 2018. CUDA has engaged in several formal refinancing processes and asset sale processes since 2019 in an attempt to fund working capital requirements related to its US assets or to refinance the loan agreement. On July 9, the operator of the US assets issued a default letter and filed a lien against CUDA in the amount of approximately US $2 million for a failure to pay unit expenses under the operating agreement. This constitutes an event of default under the loan agreement with Bridging. As a result of the foregoing and various other issues outlined in Bridging's materials, Bridging and PwC as receiver of Bridging had serious concerns about the ability of management to continue the operations of CUDA and develop a plan for the repayment of the outstanding indebtedness. Chapter 15 proceedings will also be commenced in the State of Wyoming. FTI was appointed receiver. Counsel is DLA Piper for PwC as receiver of Bridging Finance Inc.; Blakes for Tallinn Capital Energy Limited Partnership, by its general partner, Tallinn Capital Energy Corp. (a subordinate secured creditor); and Bennett Jones for FTI in it capacity as receiver of CUDA.

Alcan Fluid Disposal Ltd.

September 27, 2021

Filing Type:

Trustee: MNP

Industry:

Province:

Alcan Fluid Disposal Ltd., a Prince George, British Columbia-based oil and gas company which operated two wells for the purpose of wastewater disposal, filed an assignment in bankruptcy on September 27, listing over $2 million in debts, including approximately $130,000 for estimated reclamation costs. The company has not been an operating entity for approximately 10 years before the filing. MNP is the bankruptcy trustee.