DCL Corporation, a member of a larger group (the "DCL Group") which operates six manufacturing facilities throughout Canada, the US, the Netherlands and the UK, supplying pigments and dispersions to customers in the coatings, plastics and digital printing markets, obtained CCAA protection on December 20. On the same day, the company's parent and certain US subsidiaries obtained protection under Chapter 11 of the US Bankruptcy Code. As a result of heavy inflation in the global economy and the consistent pressures of increasing input costs, the DCL Group’s business is facing serious financial challenges. The company has also faced supply chain issues due to substantial delays and restrictions in receiving raw materials, higher costs and a higher working capital requirement. In addition, the company faced challenges with retaining and recruiting employees. These factors have eroded the company's gross margins and caused two of its three Canadian manufacturing plants to become unprofitable. The company has a number of past due payables with its trade creditors, is currently in default of various obligations under its credit facility and has a significant pension earn out owing to its previous owner. Consequently, the company is facing a liquidity crisis and urgently requires access to additional capital to meet its working capital needs, including to pay employees, vendors, utilities and the professional advisors required to address these issues. A&M was appointed monitor. Blakes is counsel for the company, Osler is counsel for the monitor, Goodmans is counsel for the Wells Fargo Bank, N.A. (the DIP lender), and Cassels is counsel for the term loan lenders. By Dina Milivojevic
Green Sanitech Inc., a Pickering, Ontario based disinfectant distribution business, filed an assignment in bankruptcy on the September 22, listing approximately $396,000 in liabilities. The company had started the business with the intention of having exclusive distribution rights for the products, which did not materialize. In addition, the competitive nature of the industry, significant pricing pressures along with the slowdown during the COVID-19 pandemic adversely affected the business. The company continued to incur costs, and with no visibility towards the revival of the business, filed an assignment in bankruptcy. Goldhar & Associates Ltd is the bankruptcy trustee By Dina Milivojevic
Canamidex International Corp., a Richmond Hill, Ontario-based supplier of parts and materials to the Canadian Department of National Defense, the NATO Support and Procurement Agency ("NSPA") and the Defense Logistics Agency, filed an NOI on June 3, listing $3.7 million in liabilities, including $3 million to BMO Financial Group. The company’s insolvency can be attributed to a specific contract with the NSPA that has resulted in losses to the company that it was not able to sustain. In 2020, the company entered into a relationship with California Aircraft and Avionics Corporation (“CAAC”), whereby Canamidex would purchase parts from CAAC and supply those parts to NSPA, to fulfil its obligations as part of the contract. In September 2021, NSPA contacted Canamidex to inform Canamidex that certain products were incorrect and counterfeit. Accordingly, NSPA halted all further orders and payments under the contract, and later cancelled the contract in June 2021. It appears that the company was a victim of a fraud that was perpetrated by CAAC. It has engaged counsel in the state of California to take legal action against CAAC. Crowe Soberman is the proposal trustee. Counsel is Goldman Sloan Nash & Haber for the company, Simpson Wigle for the proposal trustee and Chaitons for BMO. By Dina Milivojevic
Williams Telecommunications Corp., a Mississauga, Ontario-based independent distributor and servicer of new and remanufactured telecommunications equipment, was placed in receivership on May 19 on application by BMO, its secured creditor, owed approximately $2 million, and with the consent of the company. Albert Gelman was appointed receiver. Counsel is Chaitons for the receiver; Miller Thomson for BMO; and TGF for the company. By Dina Milivojevic
Jeno Neuman et Fils Inc., a Montreal, Quebec based importer and distributor of women's clothing, filed an NOI on April 5, listing approximately $2.3 million in secured liabilities, including $1.6 million to A.Y.K. International Inc. ("AYK"), and $6.4 million in unsecured liabilities. EY is the proposal trustee. Counsel is Osler for the company, KRB for AYK and McMillan for EY as proposal trustee. By Dina Milivojevic
1438706 Ontario Limited o/a Motor Impact of Canada, a Toronto, Ontario-based company in the business of importing, exporting and distributing OE genuine auto parts for Korean and Japanese vehicles such as Hyundai, KIA, Toyota, Lexus, Scion, Nissan, lnfiniti, Acura and Subaru, was placed in receivership on November 15, on application by RBC. The company has been experiencing operating losses, which are worsening, since fiscal 2020. Fuller Landau was appointed receiver. Counsel is Minden Gross for RBC and Blaney McMurtry for the company.
Industrial Automation Components Corporation, a London, Ontario-based electrical equipment and supply wholesaler, filed for bankruptcy on July 29, listing approximately $588 thousand in liabilities, including $179 thousand to Quantum First Automation. Since inception, the company has been under-capitalized. As a result, the company came to rely on high interest credit facilities as a primary source of working capital. Furthermore, for many years the company's profit has been on the decline due to narrowing product margins in response to industry-wide changes eliminating third-party suppliers. More recently, sales in key industries including Canadian pulp, mining, and petrochemical have been on the decline and worsened following the 2020 global pandemic. Lacking sufficient working capital to maintain normal operations or to fund a restructuring of the business, the company decided to stop operating on July 28. MNP is the bankruptcy trustee.
Nationwide Manufacturing Limited, a Toronto, Ontario-based manufacturer and distributor of consumer electronic products, filed an NOI on June 30. In March 2020, the company began winding down its operations, including terminating all employees and gradually liquidating all assets. Dodick Landau is the proposal trustee. Counsel is WeirFoulds for the proposal trustee.
Morris Group of Companies, which consists of four Saskatchewan-based companies and an American branch in the business of manufacturing and distributing farm equipment, had its sale to 102114983 Saskatchewan Ltd. in the CCAA proceedings (the "MEL Transaction") approved and a receiver was appointed to carry out the final administrative duties and satisfy the conditions of the MEL Transaction. BMO also brought applications for bankruptcy for certain entities in the Morris Group of Companies (the "Dormant Companies"). Since the bankruptcy orders were granted, the CCAA proceedings will be terminated in regard to the Dormant Companies and a bankruptcy trustee will be appointed. Alvarez & Marsal was appointed receiver and bankruptcy trustee. Counsel is McDougall Gauley for the Group, Burnet, Duckworth & Palmer for BMO, and MLT Aikins for Alvarez & Marsal.
193069 Canada Inc., a Montreal, Quebec-based company in the business of designing, importing and supplying unique fabrics printed on various materials to North American clothing manufacturers, filed an NOI on March 23, listing approximately $7.9 million in liabilities, including $3.6 million to Fabtrends International Holdings Inc. and $1.0 million to Fabtrends USA Corp. Prior to the COVID-19 pandemic, several large retailers of women's dresses had closed or downsized considerably, including Dress Barn and Sears. These retailers represented a significant portion of the company's business and it was unable to recover these lost sales. Moreover, the pandemic led to a sharp decrease in the demand for women's dresses and formalwear. For the year ended June 30, 2020, sales were 27% lower as compared to the prior year. Although the company implemented various cost reduction initiatives, the costs savings were insufficient to offset the impact of the lower sales volume. On March 26, the Court also authorized a sale and solicitation process for the company's business and related assets. PwC is the proposal trustee. Kugler Kandestin is counsel for the company.