Midnight Integrated Financial Inc., Tower Adventures Ltd., Booker Adventure Corp., and Comstock Adventure Corp., an Edmonton, Alberta-based group of investment companies, obtained CCAA protection on December 5. Midnight conducted its operations under the trade name "Midnight Sun Financial" and operated as a financial firm that focused on investing in private opportunities, trading in capital markets and designing unique instruments for investors in the exempt markets. Each of Tower, Booker and Comstock was engaged in the formation and sale of an inventory of foreign exchange trading partnerships which were formed and established as turnkey businesses. CRA has audited the companies' tax returns for 2016-2020 and takes the position that the companies were promoting tax shelters without registering their share offerings as a tax shelter. CRA has assessed the companies for tax shelter promoter penalties of 25% of the consideration received (a cumulative amount of over $54 million). In addition, CRA has reassessed Booker and Comstock's income for 2017, resulting in over $14 million of additional tax owing. The companies dispute the assessments. EY was appointed monitor. Counsel is DLA Piper for the monitor and Duncan Craig for the companies. By Dina Milivojevic
Aiden Pleterski, the self-described "Crypto King", and his company AP Private Equity Limited (collectively the “Debtors”) were petitioned into bankruptcy on August 9, on application by certain of their creditors. The Debtors claimed to have operated an investment business in which, among other things, investor monies were invested into cryptocurrency and foreign exchange positions. The trustee is in the process of realizing on the assets of the Debtors, including two McLarens, a Lamborghini and a collection of other high-end vehicles. The trustee is aware of over $10 million of liabilities, although the records of the Debtors are incomplete and the total amount of liabilities is believed to be much greater. Grant Thornton is the bankruptcy trustee. Counsel is Baker McKenzie for the creditors who brought the bankruptcy applications. By Dina Milivojevic
Voyager Digital Ltd. (TSX:VOYG), a publicly-traded cryptocurrency platform, had its Chapter 11 proceedings recognized under the CCAA on July 12. The company is incorporated and has its registered office at a law firm in British Columbia. Its subsidiaries in the US operate a cryptocurrency brokerage and custodial and lending services. The company maintains that the centre of its main interests is in the US. The company's request for a recognition order was unopposed, save and except with respect to the question of whether the Chapter 11 proceedings are foreign main or non-main proceedings. Certain investors and a proposed representative plaintiff in a recently commenced proposed class action in Ontario each advised that they required some additional time to formulate their position and file submissions on the issue, so the Court's determination on this question was adjourned to July 19. A&M was appointed information officer. Counsel is Fasken for the company, Aird & Berlis for certain investors, Siskinds for the proposed representative plaintiff and Blakes for the information officer. By Dina Milivojevic
Just Solutions Inc., a Moose Jaw, Saskatchewan-based insurance broker engaged in the business of selling crop and hail insurance to farmers throughout western Canada, filed an NOI on April 18. There was a dramatic increase in claims made by insureds in the agricultural sector in 2021. The company is solely a broker of the crop insurance policies and does not have any liability to insureds in the event of a claim. However, in early 2022, due to the losses on insurance policies occurring in the previous growing season, it became apparent that it was going to be very difficult for the company to obtain rights to bind insurance companies for the 2022 growing season on terms similar to previous years. As a result, the company faced the risk of ceasing to be able to function as a going concern. A SISP, including a stalking horse bid by Forage Subordinated Debt Limited Partnership II, were approved on April 22. A&M is the proposal trustee. Counsel is McCarthy Tétrault for the company. By Dina Milivojevic
Morrison Laurier Mortgage Corporation, a Toronto, Ontario-based mortgage investment corporation (the “Company”) that invests in mortgage loans to builders, developers, and owners of commercial, industrial, and residential real estate, had HPI Advisory Inc. appointed as Marketing and Mortgage Agent, as directed by inspectors also appointed. The order was obtained on consent by a majority of the Company’s stakeholders, with powers to wind up the affairs of the company pursuant to section 207 of the Ontario Business Corporations Act and to deal with the assets of the Company, including an eight storey mixed use project located in Barrie, Ontario (the "Collier Centre") whose mortgage had gone into default and which was in the process of a “work out” when the project was significantly impacted by the current pandemic. Title to the Collier Centre had been transferred under power of sale to an affiliate of the Company in 2019. The Company had continued to operate and manage the Collier Centre through Crown Realty Partners, Index Construction, and Cushman & Wakefield which will now be overseen by the Marketing and Mortgage Agent and the Inspectors as appointed by the court. In an earlier version of this article, reference was made to Morrison Financial Mortgage Corporation (“Morrison Financial”) which had been the Investment Manager of the Company until July 2020, and as to unproven and unsubstantiated claims raised against it and others by the Company board in a claim issued in November 2020 (but not served until April 2021) which action is currently in abeyance with no defences being required. However, the allegations have been denied, and, as set out in documents filed, Morrison Financial had successfully defended prior similar allegations raised against it by the Company board in 2020, which the Commercial List Court rejected holding that they were unfounded and that there was no misconduct by Morrison Financial and no harm caused to the Company. Further to the consent order, the Marketing and Mortgage Agent will continue to consult with Morrison Financial regarding the Collier Centre to assist in realizing on the Company’s investment. All of these facts were not set out in the prior version of this reporting and Insolvency Insider apologizes and regrets any confusion this may have caused. HPI Advisory Inc. was appointed Marketing and Mortgage Agent and Miller Thomson LLP is counsel to HPI Advisory Inc.
Altmore Mortgage Investment Corporation, an Ancaster, Ontario-based company that pools together investor funds with funds from banks and other financial institutions to make investments in mortgages, bridge loans and builder advances, was placed in receivership on May 25 on application by Monica Matta and Mark Amello (collectively, the "Applicants"). Between 2015 and 2018, the Applicants made substantial investments in the company by subscribing for its shares. Pursuant to their investments, the Applicants were entitled to receive monthly dividend payments in an amount equal to 12.75% per year based on the amount invested. The company, which stopped paying monthly dividends to the Applicants in May 2019 without prior notice, eventually notified its shareholders that it had temporarily halted payment of dividends. Although it advised that such dividend payments would resume in September 2019, these payments never resumed and the Applicants have not received any dividends since May 2019. As of November 2020, the company has ceased communicating with the Applicants. BDO was appointed receiver. Miller Thomson is counsel to the Applicants.
Bridging Finance Inc. ("BFI"), a Toronto, Ontario-based investment management firm with approximately $2 billion in assets under management, as well as various investment vehicles managed by the firm (the "BFI Funds"), were placed in receivership on April 30, 2021, on application by the Ontario Securities Commission ("OSC"). BFI is registered with securities regulators in all provinces and territories in Canada as a restricted portfolio manager and an exempt market dealer. The Enforcement Staff of the OSC is conducting an ongoing confidential investigation centred around allegations that BFI and certain of its officers, directors, and shareholders have: appropriated amounts from the BFI Funds for personal gain; mismanaged the BFI Funds, including by failing to disclose material conflicts of interest; breached numerous securities laws and regulations, including by misleading Enforcement Staff; and failed to act in the best interests of the Respondents’ stakeholders. As such, the OSC sought and was granted a receivership order pursuant to section 129 of the Ontario Securities Act. PwC was appointed receiver.
The Midas Investment Corporation, a Mississauga, Ontario-based company which owns two real properties in Toronto, Ontario (the "Properties"), was placed in receivership on April 6 on application by various entities, including The Bank of Nova Scotia Trust Company, which hold a first-ranking mortgage over the Properties (the "First Mortgage"). The company has been in financial default under the First Mortgage since October 1, 2013 and it now owes more than $11.0 million to the applicants. The applicants had previously been prevented from enforcing the First Mortgage due to an action in the Ontario Superior Court of Justice brought by Thomas Patrick Farrell, the company's President, seeking a declaration that the First Mortgage is unenforceable. The Court, which dismissed Farrell's action, found that he had tried to insulate the Properties from his Irish creditors and a significant portion of the First Mortgage proceeds were applied to the benefit of Farrell and the company. The applicants now allege that under Farrell's control, one of the Properties has been a wasting asset with no cash-flow since the First Mortgage went into default in 2013. The applicants also allege that Farrell has been enjoying a steady rental stream from the other Property without having to account to anyone. Rosen Goldberg was appointed receiver. Counsel is Dickinson Wright for the applicants and Maurice J. Neirinck & Associates for the company.
EncoreFX Inc., a Victoria, British Columbia-based financial services company providing foreign exchange risk management services and cross-border payment solutions, had its bankruptcy proceedings continued under the CCAA on March 30, 2021. Exactly one year earlier, on March 30, 2020, the company voluntarily assigned itself into bankruptcy as a result of atypical volatile foreign exchange market conditions driven mainly by the impact of the COVID-19 pandemic. Due to the extreme market volatility, several of the company's clients were OTM on their transactions. Under the terms of the company's standard ISDA agreements with its third-party banking counterparties (the "Liquidity Providers"), the company was required to pay significant additional margin to the Liquidity Providers to cover the value of the OTM contracts. The Plan of Compromise and Arrangement (the "Plan") entered into under the CCAA seeks to avoid the depletion of the company's assets resulting from extensive and uncertain litigation. The Plan aims to achieve this by providing a global resolution of certain claims against the company. The stakeholders with the largest claims filed against the company include Gustavson Capital Corporation, which filed a secured claim against the estate in the amount of $35.9 million, and Andreas Wrede, who filed a property claim for approximately $29.0 million. EY was appointed monitor. Counsel is MLT Aikins for the monitor, Jones Emery Hargreaves Swan for Gustavson Capital Corporation and Stikeman Elliott for Andreas Wrede.
Ardenton Capital Corporation ("ACC"), a multinational private equity corporation that acquires stakes in mid-market private businesses — along with Ardenton Capital Bridging Inc., its wholly-owned subsidiary — filed for protection under the CCAA on March 5, listing approximately $354.6 million in collective liabilities. ACC attributes its financial difficulties to two major factors. First, the portfolio companies in which ACC has indirect majority ownership interests are not generating sufficient cash flow for ACC to meet all of its corporate overhead costs, pay interest on its debt, and acquire additional businesses. Second, there have been significant disruptions in the capital raising markets because of the COVID-19 pandemic. In April 2020, ACC began deferring payments on its preferred and hybrid security products in order to conserve cash at the portfolio company level. However, the deepening impact of the pandemic has derailed the companies' attempts to catch up on these deferred payments to its investors and lenders. Since September 2020, ACC has not made any payments to its debtholders. To reduce costs thus far, in addition to office closures, ACC has implemented significant cost reduction measures, including layoffs and reductions in payroll. During the course of these CCAA proceedings, the companies intend to pursue third-party interim financing and return to Court to seek approval of such financing. KSV Advisory was appointed monitor. Counsel is MLT Aikins and Aird & Berlis for the companies and DLA Piper for the monitor.