July 12, 2019
National Recycling, a Mississauga, Ontario-based scrap metal processor and related Alberta-based company were placed in receivership on July 12 on application by RBC, owed approximately $4.7MM. in June, 2019, RBC learned that SHiFT, a foreign exchange company, had commenced an action against National Recycling to recover a loss of approximately USD $2.9MM that it suffered as a result of two foreign exchange transactions that it facilitated for the company. Due to the mechanics of how foreign exchange transactions work, SHiFT is necessarily exposed to a risk of non-performance by its clients because the cheques that it deposits are typically cleared and processed the next day, whereas the pre-authorized debits made to its clients' accounts are not cleared and processed for three business days. In the two transactions at issue, after SHiFT had already transferred the Canadian funds to the company, it learned that the pre-authorized debits to the company's US dollar account at CIBC had been rejected due to non-sufficient funds. The company initially promised SHiFT that it was looking into the situation but it has since gone radio silent, and it appears that the business is no longer operating. With the companies already in default on their loans, RBC made the decision to have a receiver appointed to investigate and assess options on a go-forward basis for the benefit of all stakeholders. Deloitte was appointed receiver. Counsel is BLG for the applicant, Loopstra Nixon for the company, Dentons for the receiver and Adair Goldblatt Bieber for SHiFT.