August 7, 2018
Safety Seal Plastics, a Guelph, Ontario-based supplier of shrink sleeve labels and other specialty printed products to the sports nutrition, craft beer, food and other industries, was placed in receivership on August 7 on application by HSBC, the company's secured lender. The company also received a $1.5MM loan from BDC as well as equipment financing from RBC and Hewlett-Packard Financial Services Canada. In January 2018, Deloitte was retained as financial consultant to HSBC and determined that the company was out of margin on its credit facilities by approximately $1.1MM. The company's board of directors had also discovered that the company's then-president had repeatedly provided them and the shareholders with misleading financial information, documents and statements, and had misappropriated company funds for personal purposes and caused the company to enter into various transactions with parties related to him. These dealings contributed to the company's current liquidity crisis. In February 2018, the company ended its relationship with this individual, and, while under a forbearance agreement, sought to effect a refinancing or investor transaction. The process led to the company entering into a letter of intent for Labelink Products to acquire substantially all of the company's assets pursuant to a receivership proceeding. Deloitte was appointed receiver. On the same date, the court approved the transaction with Labelink. Counsel is TGF for the applicant, Chaitons for the company, Goldman, Sloan, Nash and Haber for Deloitte and Aird & Berlis for RBC.