Rebuts Solides Canadiens

Rebuts Solides Canadiens, a Montreal, Quebec-based waste disposal company, along with certain other related companies, obtained protection under the CCAA on February 3, attributing its liquidity issues primarily to the decline in the recyclable materials industry. In particular, as a result of China's new recycling ban, the value of recycled materials has dropped dramatically in recent years. The price per ton of mixed paper fell from $121 in mid-2017 to $34 in November 2019. The Quebec government has authorized a $7.0 million loan to the company. The Ministry of Sustainable Development, Environment, and Fight Against Climate Change will provide $5.0 million, while RECYC-QUÉBEC will provide the remainder of the loan. PwC was appointed monitor. Fasken is counsel to the company.

Fortress Global Enterprises (TSX: FGE)

Fortress Global Enterprises (TSX: FGE), a Montreal, Quebec-based company engaged in the dissolving pulp business and the renewable energy generation sector, obtained protection under the CCAA on December 16. Previously known as Fortress Paper, the company changed its name in 2018 to reflect its intention to shift away from traditional pulp and paper operations and pursue opportunities in new business segments. The majority of the company's revenues is now derived from the production and sale of dissolving pulp, a product with a variety of commercial applications, including the production of rayon textile fibres. The market for dissolving pulp, however, has not been favourable for the company, with prices dropping from almost $950 USD per ton in 2017 to $640 USD per ton this year. Other factors have also contributed to the company's financial difficulties, including the recent Sino-American economic conflict which is disrupting markets and the garment sector which Fortress serves. In the past three years, the company has lost approximately $246.6 million. In consultation with its senior secured lenders, the company launched a sale and investment solicitation process in August 2019 with the assistance of Houlihan Lokey but to date has failed to receive any indications of interest. With no liquidity to operate in the normal course, the company's senior secured lenders, Investissement Québec (IQ) and Fiera, made an application on the company's behalf for creditor protection. While under creditor protection, it is anticipated that the company's pulp mill will be indefinitely idled while the company waits for market conditions to improve. Concurrently, the company will explore other ways to return to profitability, including potentially modernizing and upgrading its current facilities with the assistance of a new investor. Deloitte is the monitor. Counsel is BCF for the company, McCarthy Tétrault for the monitor, Stikeman Elliott for IQ, Miller Thomson for Fiera, Blakes for International Forest Products and Goodmans for Computershare.

National Recycling

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.

Harvest Fraser Richmond Organics

Harvest Fraser Richmond Organics, an indirect subsidiary of Harvest Power, a Massachusetts-based company that specializes in converting food and yard waste into biofuel, compost and fertilizer, filed for protection under the CCAA on October 12, listing approximately $23.6MM in liabilities, including $16.3MM to Harvest Canada and $5.1MM to Harvest Power. The company owns and operates a manufacturing facility in Richmond, British Columbia for processing organic waste ("Compost Facility"), as well as an electricity-producing anaerobic digestion facility ("Energy Garden"). Pursuant to agreements with various cities in the lower mainland, the company accepted organic and food waste materials from these cities for processing at its facility. In September 2016, Metro Vancouver issued an air quality management permit to the company containing requirements such as reducing the height of compost piles and replacing its composting system. Despite operating under this permit, the Compost Facility has been affected by odour complaints from neighbouring residents since 2016 and has been the subject of reporting by Vancouver media outlets. In response to these complaints, the Energy Garden eventually ceased operation in April 2017. This shut down resulted in the company being unable to meet its energy delivery obligations to the British Columbia Hydro and Power Authority ("BC Hydro") under its agreement to sell BC Hydro certain quantities of renewable energy generated by the Energy Garden. BC Hydro advised that it would bill the company $12.5M in respect of the energy delivery shortfalls to date. The company cites further reasons for its financial difficulties, including, among other things, the fact that the company had to shut down one of its composting systems under the permit, which reduced the company's revenue. In addition, as of February 2018, Metro Vancouver has diverted certain of its waste to alternate service providers for processing. During these CCAA proceedings, Maynbridge Capital will be providing up to $1.0MM in DIP financing. EY was appointed monitor. Bennett Jones is counsel to the company.

BioAmber Sarnia and BioAmber Canada

BioAmber Sarnia and BioAmber Canada, the subsidiaries of BioAmber (TSX:BIOA), a Montreal, Quebec-based sustainable chemicals company, filed for protection under the CCAA on May 24, having previously filed NOIs on May 4. The company has listed $63.2MM in liabilities, including $10.0MM to BDC Capital and $10.0MM to Comerica Bank, Export Development Canada and Farm Credit Canada, collectively. PwC was appointed monitor. Counsel is Blakes for the companies, BLG for the monitor, TGF and Lavery for BDC Capital and McMillan for Comerica Bank.

BioAmber Sarnia and BioAmber Canada

BioAmber Sarnia and BioAmber Canada, the subsidiaries of BioAmber (TSX:BIOA), a Montreal, Quebec-based sustainable chemicals company, filed NOIs on May 4, while the parent company filed for US Chapter 11 bankruptcy. Given that Sarnia-Lambton's economy traditionally centres around petro-chemical and refining companies, BioAmber was a pioneer in the city's push for more economic diversification. At its plant in Sarnia, which attracted approximately $52.0MM in federal and provincial funding, the company used corn syrup to make a chemical used in products ranging from paints and plastics to cosmetics and food additives. These filings will effectively impose an automatic stay of proceedings that will protect the Canadian subsidiaries and their assets from creditor claims during restructuring. PwC is the proposal trustee.

Innovative Steam Technologies

Innovative Steam Technologies, a Cambridge, Ontario-based supplier of heat recovery steam generators that capture and use steam for electricity production and enhanced oil recovery, was placed in receivership on May 1 on application by HSBC, owed approximately $13.1MM (CAD) and $3.0MM (USD). Back in 2015, Aecon Group (TSX:ARE) sold the company, which was a wholly-owned subsidiary, to Fulcrum Capital Partners for approximately $35.0MM. Based on current financial information provided to HSBC, the prospect of the company achieving positive cash flow is bleak: for three months, the company suffered a loss of around $1.7MM, and it reported a deficit of assets to liabilities of $11.2MM. Furthermore, its inability to contract new long-term projects from major customers and obtain further financial support from its shareholders has been commercially catastrophic for the company. Deloitte was appointed receiver. Counsel is Dentons for the applicant and Aird & Berlis for the company and Fulcrum.

Agriculture Technology Inc and several related companies

Agriculture Technology Inc and several related companies (ATI), Ontario's largest agricultural waste recycler, based in Cottom, Ontario, was placed in receivership on April 18 on application by BMO, owed approximately $15.0MM. Since 1998, ATI has offered a specialized process by which customers' agriculture waste is converted into saleable end products including reusable grow media and repurposed plastic products. MNP was appointed receiver. Counsel is Chaitons for the applicant and Miller Thomson for the receiver.

Surefire Bioenergy

Surefire Bioenergy, an Amherstburg, Ontario-based company specializing in bioenergy and bio-mass pelletizing, was placed in receivership on April 17 on application by BNS, owed $240.0M. BDO was appointed receiver. Counsel is Harrison Pensa for the applicant and Kirwin & Partners for the company.

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