February 15, 2019
Erwin Hymer Group North America, a Cambridge, Ontario-based recreational vehicle ("RV") manufacturer, was placed in receivership on February 15 on application by Corner Flag, owed approximately. $5.1MM. Pursuant to a share purchase agreement entered into in September 2018 (the "Thor Transaction") for $3.1B, Thor Industries was to acquire Erwin Hymer Global Group, an international group of entities engaged in the manufacture and sale of RVs. However, following the execution of the agreement, Thor became aware of certain long-standing financial irregularities in the North American entity's books and records. As a result, the parties amended the agreement to exclude the North American entities from the scope of the Thor Transaction. Subsequently, Erwin Hymer Global Group's parent company, EHG SE, divested its ownership interests in the North American entity to Corner Flag, a special purpose Delaware limited liability company that was formed to acquire these ownership interests. Since January and the discovery of the financial irregularities in the company's financial reporting, the company has been experiencing significant operational, liquidity and governance challenges, which have rendered it unable to continue operating in the normal course. A number of key management and employees have been suspended pending the outcome of an investigation into the financial irregularities and all but one of the directors of the company have resigned. The company currently has in excess of $300.0MM in liabilities and does not have sufficient funding to support its 850-employee workforce. During these proceedings, it is expected that Corner Flag will provide additional funding for, amongst other things, the payment of terminated employees' unpaid vacation pay. Alvarez & Marsal was appointed receiver. Counsel is Blakes for the applicant, Aird & Berlis for Jeff Merk, the director of the company and Osler for the receiver.