November 21, 2022
Groupe Sélection Inc. et al., one of the largest owner/operators of senior living residences in Canada, obtained CCAA protection on November 21. The company sought to have FTI appointed as monitor. The company's lenders (National Bank, CIBC, Desjardins, TD, BMO, HSBC, Briva Finance and Fiera), who are collectively owed over $270 million, immediately filed a competing CCAA application, arguing that they were blindsided by the company's approach and that it was acting in bad faith. According to the lenders, the company is cash flow negative and has operated in a manner that is financially untenable. The lenders submit that the company is currently burning millions of dollars per month while refusing to reduce its expenses, and that their collateral is deteriorating in value. The lenders also argue that the company's principal is exerting undue influence over the company by preventing the implementation of restructuring measures and, among other things, has used the company's liquidity to fund a lavish lifestyle and for unnecessary expenses such as the use of a private jet. Judge Michel A. Pinsonnault ruled on Monday in favour of the lenders and PwC was appointed CCAA monitor. The company, however, has sought permission to appeal. Counsel is Stikeman Elliott for the company, Norton Rose Fulbright for National Bank representing the banking syndicate, McCarthy Tétrault for FTI, Fasken Martineau for PwC, Davies for Desjardins, Fishman Flanz for BMO and Gowling WLG for Briva Finance and Fiera.
By Dina Milivojevic