Our summaries of recent Canadian insolvency filings.

2314251 Ontario Inc.

November 15, 2022

Filing Type:

Trustee: msi Spergel

Applicant: TD Bank

Applicant Counsel: Aird & Berlis

Industry:

Province:

2314251 Ontario Inc., a North York, Ontario ESSO gas station operator, was placed in receivership on November 15, on application by TD Bank, owed approximately $2.4 million. The company provided to TD Bank false financial reporting in the form of falsified and misleading accounting firm documents. A subsequent site visit to the gas station revealed that there was no gas being offered for sale and that a sign was posted stating: “Sorry we don’t have any gas. We have had no gas since January and we don’t know when we will get it again.” The company had not advised TD Bank of the discontinuance of its gas station operations, or of any termination of any fuel contract, all of which were covenant obligations under the credit facilities with TD Bank. msi Spergel was appointed receiver. Counsel is Aird & Berlis for TD Bank.

By Dina Milivojevic

Filing Type:

Company Counsel: Osler

Trustee: Deloitte

Trustee Counsel: McCarthy's

Industry:

Province:

Xebec Adsorption Inc. and various subsidiaries (collectively, the "Xebec Group"), a Montréal, Québec-based global provider of sustainable gas solutions used in energy, mobility and industry applications, obtained CCAA protection on September 29. The Xebec Group has incurred material operating losses since 2020. Its financial difficulties were attributable to a number of factors, including its inability to raise additional capital given the state of capital markets, supply chain constraints, impact of the COVID-19 pandemic, the geopolitical factors and increasing selling, general and administrative expenses resulting from the number of acquisitions completed over the last two years and the completion costs of legacy renewable natural gas contracts and the costs associated with discontinuing such product line. As part of the initial order, the Court declared Montreal, Quebec to be the Xebec Group's COMI for the purpose of recognition proceedings under Chapter 15 of the US Bankruptcy Code. Deloitte was appointed Monitor. Counsel is Osler for the Xebec Group, McCarthy's for the Monitor, BLG for National Bank and Norton Rose for EDC. PwC is Financial Advisor for National Bank.

By Dina Milivojevic

Filing Type:

Company Counsel: Jensen Shawa Solomon Duguid Hawkes

Trustee: A&M

Trustee Counsel: Blakes

Industry:

Province:

Petrolama Energy Canada Inc., which operates a crude oil and natural gas liquids marketing and trading business, filed an NOI on July 27, listing approximately $15 million in unsecured liabilities. The company currently has no bank debt and no secured creditors. In 2013, the company constructed and operated a crude oil blending terminal in Alida, Sasaktchewan, and peaked with annual revenues of over $900,000,000 in 2014. In July 2016, the company sold the majority of its commercial assets to Secure Energy Services Inc. where most of its employees also went. The company then focused on moving Canadian crude oil and propane and selling it into the United States. Since then, a number of factors have led to the company’s insolvency. They include the loss of bank financing, the delay in completion of facilities, a regulatory rejection of a project, the high cost of crude oil storage under long term contracts, and the 2020 market crash of the price of crude oil and its subsequent volatility. A&M is the proposal trustee. Counsel is Blakes for the proposal trustee, Jensen Shawa Solomon Duguid Hawkes for the company, MLT Aikins for Keyera Energy Inc. and DLA Piper for OdysseyNRG Ltd.

By Dina Milivojevic

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.