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.
AVAD Canada Ltd., the Canadian operating affiliate of the North American business of AVAD, a wholesale distributor of a variety of electronic equipment and accessories, was placed in receivership on March 17 on application by MidCap Funding IV Trust ("Midcap"). The company owes approximately $498.0 thousand under a Credit Agreement between MidCap (as agent), certain lenders, and the company and its affiliates. As a result of various events of default under the Credit Agreement, the security granted by the company under the Credit Agreement has become immediately enforceable and the obligations owing under the Credit Agreement by the company are due and payable. The company's material tangible assets in Canada consist of an inventory of electronic products and accessories located at leased warehouse facilities in Mississauga, Ontario and Calgary, Alberta. MNP was appointed receiver. Norton Rose Fulbright is counsel to the applicant.
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.