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.
Advantagewon Capital Corp., a London, Ontario-based company in the business of providing consumer auto repair loans to individuals, was placed in receivership on January 18 on application by FMMC Private Yield Fund Limited Partnership I ("FMMC"), owed approximately $3.3 million. Following various defaults by the company on its obligations under its credit facilities and security arrangements with FMMC, the applicant demanded repayment of the company's indebtedness. The company, which has not yet made any payments to satisfy FMMC's demand, has discussed a potential sale of the company's assets to Dorsia Capital (London) Inc. Link & Associates was appointed receiver. Counsel is Fogler, Rubinoff for the applicant, Aird & Berlis for the receiver, and Siskinds for the proposed purchaser.
Safeguard Real Estate Investment Fund IV Limited Partnership and CEP LP Investment Corp. ("CEP") (collectively, the "Defendants), were placed in receivership on December 4 on application by Connect First Credit Union Ltd. ("Connect First"), owed approximately $15.5 million. As security for repayment of the Defendants' indebtedness to Connect First, CEP executed a mortgage in favour of Connect First over certain real property. In May 2018, Connect First commenced a foreclosure action against the Defendants with limited success. Despite Connect First issuing demands and notices for repayment, the indebtedness continues to remain due and outstanding. In addition to the Defendants' indebtedness to Connect First, they also owe approximately $1.3 million in property taxes to the City of Calgary. BDO was appointed receiver. Carscallen is counsel to the applicant.
British Columbia Discovery Fund Inc. (the "Fund"), which was formed in 2002 as a vehicle to invest in eligible small businesses as part of the venture capital program started by the government of British Columbia, was placed in liquidation and ceased trading on December 1. The Bowra Group, which was appointed Liquidator, assumed control of the Fund and will settle its obligations, dispose of its remaining assets, and make final distributions to shareholders. In accordance with the steps for the voluntary liquidation as approved by shareholders in the Information Circular, the Liquidator will liquidate the portfolio assets of the Fund upon the occurrence of liquidity events or secondary trading opportunities in the underlying portfolio.
Nabis Holdings Inc. (CSE:NAB), a Canadian investment issuer that invests in high quality cash flowing assets across multiple industries, including real property and all aspects of the U.S. and international cannabis sector, filed a proposal on November 23 after entering into a support agreement with certain holders of the company's outstanding unsecured convertible debentures in the amount of $35.0 million. Pursuant to this support agreement, the holders have agreed to support a recapitalization plan for the company which will be implemented pursuant to a BIA proposal. Previously, the company announced that Odyssey Trust Company commenced legal action against the company alleging a breach of the terms of the debentures as a result of a missed interest payment. In light of the company's liquidity constraints, the company believes that the recapitalization, including the proposal and support agreement, are in the best interest of the company and its stakeholders. KSV is the proposal trustee. Counsel is McMillan for the company, Bennett Jones for the debenture holders and Chaitons for the proposal trustee.
Exponential Group, a group of early stage companies in the business of investing in other other startup companies primarily in the financial technology sector, were placed in receivership on November 4 on application by 2444467 Ontario Inc. ("JT HoldCo") and James Town. From the Group's inception, JT HoldCo has provided the substantial majority of the Group's operational funding. ExV Inc., one of the companies in the Group, owes approximately $3.1 million to JT HoldCo. As the principals of the Group are currently unable to agree on anything regarding the management and operations of the business, they require the assistance of a receiver. MNP has been appointed receiver. Counsel is Paliare Roland for the applicants, Chaitons for the receiver and Bennett Jones for James Wallace McCreary.
Curexe Inc., a Toronto, Ontario-based company that provides online payment processing services to merchants operating in a variety of sectors and industries, was placed in liquidation on November 2 on application by SmartPay Inc. ("SmartPay"), which owns all of the issued and outstanding shares of the company. Pursuant to a Memorandum of Understanding, the company pays SmartPay the net fees received from its clients in return for SmartPay providing all of the "back room" services required for the company to provide services to its clients. Around June, the company's deposit accounts with Luminus Financial Services & Savings Credit Union Limited ("Luminus") were inexplicably frozen and, as a result, the company has been unable to carry on business in the ordinary course. SmartPay believes it is in the best interests of the company's clients to liquidate the company so that the funds held by Luminus can be distributed in an orderly fashion. MNP was appointed liquidator. Gowling WLG is counsel to the applicant.