Globeways Canada Inc. ("Globeways"), a Mississauga, Ontario-based company that carries on business as a processor and wholesaler of pulse crops, was placed in receivership, along with its subsidiaries, on November 19 on application by TD, owed approximately $13.0 million (CAD) and $84.1 thousand (USD). By September 2019, Globeways was in default of a number of covenants in its banking arrangements with TD, including substantial defaults in financial reporting and borrowings that exceeded the authorized amount. Partly in order to address liquidity concerns, the companies sold three of their formerly-owned processing pants in Saskatchewan to an unrelated party. However, following the closing of the sale, the companies remained in default of their covenants with TD. Furthermore, since the companies' operations are regulated and subject to licenses issued by the Canadian Grain Commission, they must post security and maintain adequate claims insurance for their obligation to farmers. However, due to significant claims advanced by certain unpaid farmers, the insurer of such policies has delivered notices of cancellation to the companies. Without adequate insurance and security to satisfy the statutory requirements, the companies cannot continue operations. BDO was appointed receiver. Counsel is Aird & Berlis for the applicant, MLT Aikins for the receiver, and Simmons da Silva for the companies.
Trigger Wholesale Inc., The En Carde Group Inc., Mark Gdak, Jaimee Lynn Gdak and Jaimak Real Properties Inc. were placed into receivership on October 22, 2020, on application by ClearFlow Commercial Finance, owed approximately $48.6 million. Trigger is a Waterloo, Ontario-based firearms and ammunition wholesaler. The application was precipitated by allegations of a long-standing, organized pattern of fraud on the part of Trigger and Mark Gdak that recently came to the attention of ClearFlow. The alleged fraud consisted of, among other things, allegations of hundreds of falsified invoices as evidence of accounts receivable that did not exist, falsified purchase orders, a forged transfer of real property, fake email addresses of executives at Canadian Tire and Home Hardware, verbal and email impersonations of executives employed by Canadian Tire and Home Hardware, and forged cheques made to look like payments by Canadian Tire and Home Hardware to Trigger for the alleged purchase of firearms. ClearFlow is not aware of the extent of its loss but estimates that it is in the millions and possibly tens of millions of dollars. Grant Thornton was appointed receiver. Counsel is BLG for the receiver, Torkin Manes for the applicant and Lerners for the debtors.
HOW Fashions International Inc., Montreal, Quebec-based importer and distributor of women’s and men’s high-end fashion brand clothing and accessories, and 9896481 Canada Inc., the owner of certain trademarks related to fashion brands sold by HOW Fashions International Inc., each filed an NOI on October 22. The business suffered drastic financial difficulties as a result of the COVID-19 pandemic, resulting in the brand and the related merchandise having little realizable value. HSBC, the companies' senior secured creditor, engaged EY to assess the companies' operations with the companies' advisors. In August, the companies and their advisors began to implement a recovery and exit plan, including soliciting prospective purchasers for the sale of some or all of the companies’ assets. This resulted in the companies receiving an offer made by Captive Brands Corp. to purchase all of the companies’ intellectual property, as well as assets of its US counterpart, HOW International USA, Inc. The Quebec Superior Court (Commercial Division) granted an Approval and Vesting Order on October 29. EY is the proposal trustee. Counsel is Kugler Kandestin for the companies, Scheib Legal for Captive Brands Corp., Davies for HSBC and Fasken for the proposal trustee.
Alasko Foods Inc. and Alasko Foods LLC, a Montreal, Quebec-based company that specializes in the distribution of frozen fruits and vegetables, was placed in receivership on September 4, owing approximately $26.9 million to PNC Bank Canada. According to a Global News report, Cesar Ramirez — the owner of Frutti di Bosco, a Chilean fruit trading company — alleged that he had colluded with Alasko Foods Inc. to ship fraudulently labelled raspberries to Canada, although the company has denied these claims. Prior to the issuance of the receivership order, the companies had engaged Raymond Chabot to run a Sale and Investor Solicitation Process to identify and solicit potential buyers and investors. On October 13, the receiver, Raymond Chabot, and a purchaser agreed to a final form of an Asset Purchase Agreement whereby the receiver would sell substantially all of the companies' assets to the purchaser, minus the company's assets which are located in Ingersoll, Ontario. Fasken is counsel to the receiver.
Samboro Luggages, a Richmond Hill, Ontario-based distributor and wholesaler of branded travel luggage, was placed in receivership on June 18 on application by HSBC Bank Canada, owed approximately $317.3 thousand (USD) and $2.0 million (CAD). The company assigned itself into bankruptcy on June 9, which constituted an event of default under the company's loan documents with the bank. Farber is the receiver and bankruptcy trustee. TGF is counsel to the applicant.
Evergreen Consumer Brands, a Brampton, Ontario-based manufacturer and distributor of personal grooming products under brand names such as Daily Defence, Salon Selectives, and Silkience, was placed in receivership on February 13 on application by National Bank, owed approximately $4.4 million. The company, which defaulted on certain obligations under its credit agreement and forbearance agreements with National Bank, retained Alvarez & Marsal to assist it in obtaining replacement financing and to conduct a sale and investment solicitation process for the business ("SISP"). Although negotiations regarding proposals to purchase the business are ongoing, in light of the company's increasingly distressed financial situation, National Bank believes it is appropriate to appoint a receiver to take carriage of the SISP and identify the most favourable offer. Deloitte was appointed receiver. TGF is counsel to the applicant.
CLM Distribution Pool & Spa Products and Lectranator Systems, Calgary, Alberta-based pool and spa products distributors, filed for bankruptcy on January 10, respectively listing $3.5 million and $925.1 thousand in liabilities. Grant Thornton is the bankruptcy trustee.
8318085 Canada, a Montreal, Quebec-based company which designs, imports and distributes women’s outerwear garments, its main focus being coats, filed an NOI on December 17, listing $10.8 million in liabilities, including $2.1 million to RBC and $1.1 million to Jiangsu Sainty Glorious Trade. Several factors led to the company’s insolvency, including a reduction in sales as well as the introduction of a new software system that resulted in inaccurate reporting of the business’ performance. Although the company is currently still in operation, it must promptly complete its activities related to the spring and winter 2020 seasons - such as booking orders and making purchases - in order to maintain viability. As part of the restructuring, the company will undergo a sale and solicitation process to market the business to potential acquirers, investors, or strategic partners. KPMG is the proposal trustee. Kugler Kandestin is counsel to the company.
CMS Toys/Halloween Alley, an Edmonton, Alberta-based toy distributor and novelty retailer, filed an NOI on December 16, listing $8.1 million in liabilities. The Bowra Group is the proposal trustee.
Cartise, a Montreal, Quebec-based distributor of women's fashion and apparel, was placed in receivership on October 24 on application by HSBC, owed approximately $1.3 million. Operating for over 40 years, the company sold to various boutiques and other retailers across Canada and the United States. EY was appointed receiver. Davies is counsel for the applicant.