Vert Infrastructure Ltd. (CSE:VVV), a holding company which provides funding, infrastructure, and branding to affiliated licenced cannabis and hemp growers and extractors in the US, was placed in receivership on June 16 on application by KW Capital Partners Limited, owed approximately $5.2 million as the agent on behalf of the company's secured lenders. It is alleged that the company transferred money to its most significant subsidiary, Elite Ventures Group LLP, for the purposes of developing certain real property interests in Nevada, US. Currently, the applicant is seeking the appointment of a receiver to investigate whether the transfer of funds from Elite to other parties for no consideration constitutes a transaction at undervalue. The company's most recent interim financial statements indicate that it has a cash balance of under $2,000 and a shareholders' deficit of more than $22.0 million. KSV Advisory was appointed receiver. Garfinkle Biderman is counsel to the applicant.
Stableview Asset Management Inc., Stableview Yield & Growth Fund, Stableview Progressive Growth Fund, Stableview Insight Fund LP and Stableview Insight Fund GP Inc. (collectively, the “Stableview Group”), a Toronto, Ontario-based financial asset management firm, was placed into receivership on June 9 on application by the Ontario Securities Commission (the "OSC"). In January 2019, an OSC compliance review found that the Stableview Group — along with its sole director and officer — engaged in conduct that breached the Securities Act in a number of fundamental ways, including causing the funds to become significantly over-concentrated in investments of a penny stock named Clarocity Corp. Although Clarocity's financial circumstances deteriorated during the period the Stableview Group invested in the company, Stableview continued to direct investments into Clarocity. The investments subsequently caused the funds to breach their investment restrictions. As a result of these breaches, in November 2019, the OSC imposed conditions on the Stableview Group's registrations with the OSC, including trading and financial restrictions as well as prohibitions on redemptions without approval. Since those steps were taken, however, the OSC alleges that the Stableview Group and its sole director and officer continue to engage in misconduct. A receivership proceeding was initiated in an attempt to protect investors' interests while investigation and enforcement efforts continue. Grant Thornton was appointed receiver and manager. Counsel is Chaitons for the receiver and Wright Temelini for the Stableview Group.
First Hamilton Holdings Inc., a Toronto, Ontario-based investment corporation specializing in high yield bonds, along with its subsidiaries, was placed in liquidation on May 21, listing approximately $34.0 million in liabilities. The company, whose business is closely related to PACE Securities Corp. ("PSC"), attributes its financial difficulties to various factors, including the COVID-19 pandemic, which resulted in the company having to respond to margin calls by Laurentian Bank Securities ("LBS"), PSC's carrying broker and the custodian of the securities of the company's clients. While the company was able to reach certain arrangements with LBS in April, the company was required to liquidate significant portions of its portfolio of corporate bonds to meet LBS' new margin requirements. This reduction in the assets of the company's portfolio meant lower interest income from the corporate bonds which it held. The company was also forced to sell its corporate bonds at prices substantially less than their acquisition costs. MNP was appointed liquidator. Dickinson Wright is counsel to the companies.
HyperBlock (CSE:HYPR), a Toronto, Ontario-based company that operated one of the largest cryptocurrency mines in North America, filed for bankruptcy on May 19, listing approximately $10.4 million in liabilities, including approximately $5.0 million to Project Spokane and $2.8 million to Sean Walsh. On May 14, the company's electricity provider terminated its long-term power contract with the company. This termination, combined with the impact of the recent Bitcoin algorithm halving which cut the company's mining rewards in half, and the company's generally deteriorating working capital position, made it unable and uneconomical to continue operations. Crowe Soberman is the bankruptcy trustee.
PACE Securities Corp., a subsidiary of PACE Savings & Credit Union Ltd. (the "Credit Union") which operates as an Ontario Securities Commission regulated investment fund manager and dealer regulated by the Investment Industry Regulatory Organization of Canada (“IIROC”), was placed in liquidation on May 14. In 2018, the Credit Union was placed under the administration of the Financial Services Regulatory Authority after financial irregularities were uncovered. On May 21, the IIROC suspended the company from its membership. EY was appointed liquidator. Goodmans is counsel to the company.
Mill Street and Co. Inc., a Thornhill, Ontario-based privately-owned diversified investment company, was placed in receivership on May 12 on application by Crown Capital Private Credit Fund, by its general partner, Crown Capital Private Credit Management Inc., owed approximately $10.7 million. The company has a long history of defaulting on its credit agreement with Crown Capital, and Crown alleges that the defaults have been increasing in severity over time. Noah Murad, the company's sole director and officer, has denied these defaults and even threatened Crown Capital with legal action. With Mr. Murad’s promise of an immediate buyout of Crown Capital's position being unfulfilled, negotiations in respect of an amendment to the credit agreement not yielding any results, and the company continuing to default under the credit agreement, Crown Capital has completely lost confidence in the company and Mr. Murad. Farber was appointed receiver. Counsel is Aird & Berlis for the applicant and Kramer Simaan Dhillon for the company.
EncoreFX, a Victoria, British Columbia-based foreign exchange firm, filed for bankruptcy on March 30. After suspending its trading activities, the company advised clients that the restructuring had become necessary as a number of customers to whom the company granted credit defaulted on their obligations to the company because of the rapid changes in the FX market caused by COVID-19. Most of the company’s clients were importers and exporters doing $10.0 million to $50.0 million in FX transactions a year. EY is the bankruptcy trustee.
Gozco, a Calgary, Alberta-based investment firm, filed for bankruptcy in March 2018. PwC was appointed trustee. George Gosbee, who passed away in November 2017, was the company's sole director, officer, and shareholder. Karen Gosbee, his spouse, is the personal representative of Mr. Gosbee's estate. On January 7, PwC filed an application for an order declaring, amongst other things, that certain transactions granted by the company in favour of BNS (collectively, the "BNS Transaction") constitute a transfer at undervalue and are void as against the trustee. Bowfort, the company's primary creditor, had provided to the company a loan of USD $5.0 million secured by a promissory note dated January 2014. This loan was advanced to the company to assist in funding its USD $7.5 million investment in a US business venture. The company did not make any repayments of the loan to Bowfort other than certain baseline annual interest payments. On August 10, 2017, the Gosbees entered into a commitment letter with BNS to open a private and personal overdraft lending account. At their direction, the company completed a series of transfers whereby USD $750.0 thousand belonging to the company was transferred into this personal account, to the detriment of the company's creditors. At the time the BNS Transaction was completed, the company was insolvent. It is alleged that there was no valid business purpose for the company entering the BNS Transaction, and by doing so, it breached its obligation to Bowfort. PwC alleges that the BNS Transaction was intended to defraud, delay, or hinder the company's creditors. Bennett Jones is counsel to the applicant.
Dion Global Solutions (Canada), the Canadian branch of a global financial technology company based in India, filed for bankruptcy on December 30, listing $4.5 million in liabilities, including $3.2 million to FTI Consulting Hong Kong and $1.3 million to FTI Consulting Singapore. Farber is the bankruptcy trustee.
Einstein Exchange, a Vancouver, British Columbia-based cryptocurrency exchange with customer deposits equivalent to over $16.3 million, was placed in interim receivership on November 1 on application by the British Columbia Securities Commission. After receiving multiple complaints from members of the public claiming that they could not access their funds from Einstein, as well as complaints about improper use of funds and potential money laundering, the Commission issued an investigation order in May 2019. As part of the investigation, on October 31 the Commission demanded that Einstein, through its counsel, provide information about where its cryptocurrencies are stored. Two hours later, Einstein's counsel notified the Commission that it was no longer representing the company. The next day, the Commission visited Einstein's office and discovered that the elevator was locked for all floors. A phone call to the number listed on the company's website's stated that all its agents were unavailable. An interim receivership order was therefore immediately sought to preserve and protect the cryptocurrency and other assets of or held by the company. Grant Thornton was appointed interim receiver. Lawson Lundell is counsel for the applicant.