AAA Windows and AAA Holdings, two related Calgary, Alberta-based corporations, were placed in receivership on January 27 on application by Canadian Western Bank ("CWB"), owed approximately $4.7 million. While AAA Holdings effectively operates as a real estate holding company with title to a building located in Calgary (the "Property"), AAA Windows operates from leased space on the Property as a supplier, manufacturer, and installer of windows and doors. The overall downturn in Calgary's economy during the last several years has negatively impacted AAA Windows' business and cash flow. The court granted CWB's application for a pre-pack sale of both companies' assets. Hardie & Kelly was appointed receiver. Counsel is Burnet, Duckworth & Palmer for the applicant and Parlee McLaws for the receiver.
Morris Group of Companies, which consists of four Saskatchewan-based companies and an American branch in the business of manufacturing and distributing farm equipment, filed for protection under the CCAA on January 8, listing approximately $4.4 million in liabilities, including $2.1 million to De Lage Landen and $1.9 million to Kubota Canada. Morris Industries is the primary operating company and manufactures air carts, drills, seeders, and bale carriers. In recent years, the Morris Group has incurred significant losses due to several factors: the introduction of a new product line that experienced warranty issues which required a significant capital investment beyond foreseeable estimates; the Group's increased costs were accompanied by decreasing sales; and, as a result of declining financial results, the Group lost access to a factoring facility that had previously provided for the early payment of a substantial portion of its accounts receivable. Currently, each of the companies is unable to meet its obligations as they become due and is facing an imminent liquidity crisis. On January 16, the court granted the Group a stay of proceedings until March 27. BMO will be providing interim financing to the Group during the CCAA proceedings. Alvarez Marsal was appointed monitor. Counsel is McDougall Gauley for the Group, Burnet, Duckworth & Palmer for BMO, MLT Aikins for Alvarez & Marsal, Cassels Brock for De Lage Landen, and Miller Thomson for Kubota Canada.
Barrymore Furniture, a Toronto, Ontario-based manufacturer and retailer of high-end furniture with a history dating back to 1919, filed an NOI on November 29, listing $7.5 million in liabilities, including $3.7 million to HSBC and $454.5 thousand to BDC. Historically, the company achieved revenues of over $10.0 million in each of its fiscal years ended April 30, 2017 and 2018. From late 2018 to the fall of 2019, however, the company experienced a dramatic reduction in sales which caused substantive liquidity issues. In the last few months the company has been operating at unsustainable monthly losses and became overdrawn on its operating loan facility. The NOI filing is intended to give the company temporary relief from creditors to allow it to carry on business through the holiday season and canvas the market for potential buyers of its business and/or assets. Farber is the proposal trustee. Counsel is Loopstra Nixon for the company, Chaitons for the proposal trustee, TGF for HSBC and Lipman Zener & Waxman for BDC.
British Steel, one of Europe's leading steel makers, obtained Canadian recognition of its UK-based insolvency proceedings on November 13. Despite generating revenue of nearly £1.2 billion, the company lost nearly £19.0 million in its latest fiscal year, as the commercial environment in which it operated deteriorated as a result of, among other things, the uncertainty caused by the UK's decision to leave the European Union (Brexit). Rescue talks failed and on May 22, the UK Court issued an order for the company to be wound-up. Though British Steel does not have a place of business in Canada, it did sell products to Canadian purchasers. In the course of these sales, British Steel was assessed by CRA for GST/HST liabilities of approximately $850.0 thousand and is owed refunds from the CRA of approximately $527.0 thousand. CRA is holding these refunds and is threatening to take legal action to collect the assessed liabilities. In order to resolve these outstanding tax issues, recognition of the UK proceedings was sought. EY is the information officer. Stikeman Elliott is counsel for the applicant.
Le Bon Croissant, a Mississauga, Ontario-based manufacturer and distributor of baked goods, was placed in receivership on October 24 on application by CIBC, owed approximately $2.5 million. Producing croissants, breads, and frozen baked goods such as garlic bread for large private label brands such as Weston Group and Sobeys, the company was transferred to the bank's special loans group in early October. Soon after, the company's principal advised that he had decided to exit the business and that, absent an immediate cash injection, the company was not viable and could not continue to operate. He further advised that he would be leaving on October 19 for a two and a half week cruise in the Mediterranean and was prepared to "hand over the keys" to CIBC, if CIBC so desired. Demands were promptly made and BDO was appointed receiver. Minden Gross is counsel for the applicant.
Aquila Fabrication and Equipment, a Red Deer, Alberta-based manufacturer of products for the upstream oil and gas industry, along with certain related companies, was placed in receivership on October 18 on application by Tom and Donna Trenerry. Significant and irreconcilable differences have arisen between the applicants, the 100% shareholders of Aquila, and Randal James Hofer, the applicants' son-in-law and an employee in the business responsible for its day-to-day operations. The applicants allege that Hofer is mismanaging the company, including issuing unjustified cheques to himself personally and arranging the company's affairs in a manner which precludes the applicants from having sufficient visibility into the activities and operations of the business. Hofer has allegedly refused to cooperate with the applicants' requests for information and documentation and, fearing that the company may not have sufficient liquidity to meet its obligations, the applicants sought the appointment of a receiver to protect the interests of the company and its creditors. KPMG was appointed receiver. Counsel is Cassels Brock for the applicants, MLT Aikins for the receiver and Warren Sinclair for Randal Hofer.
Westridge Cabinets, a Red Deer, Alberta-based cabinet manufacturer, was placed in receivership on August 16 on application by BMO, owed approximately $2.4 million. Attributing its financial difficulties to the consistent decline in housing starts in Alberta, the company filed an NOI on July 5 after its majority shareholder, Toronto-based Signal Hill Equity Partners, advised that it was no longer prepared to continue supporting the company's financial losses. While under creditor protection, the company began a wind-down of its operations. No proposal was filed by the company and on August 10 it was deemed bankrupt. BMO then moved for a receiver to be appointed to protect its interests. PwC was appointed receiver. Counsel is Dentons for the applicant, BLG for the receiver and TGF for Signal Hill.
Acier Orford, a Sherbrooke, Quebec-based company specializing in the manufacturing and installation of reinforcing steel and wire mesh, filed a proposal to its creditors on August 16. In March 2019, it was discovered that the company's accounts receivable included invoices for future work and extras on projects that had not yet been approved. It was also discovered that the company's inventory had been overstated. In May 2019, two of the company's senior lenders, BDC (owed $1.8 million) and TD (owed $9.8 million), issued demands for repayment. In response, the company has put together a restructuring plan that will see Groupe Dallaire, a supplier and major business partner, take over the company. The restructuring will see the company's secured lenders take a discount on their loans, and a basket payment of $200.0 thousand is being offered to the company's remaining unsecured creditors. PwC is the proposal trustee. Counsel is Serge Dubois for the company, McCarthy Tétrault for the proposal trustee, Fasken for TD, BLG for BDC and Langlois Avocats for Groupe Daillaire.
Plasticon Canada, a Montreal, Quebec-based manufacturer of fiberglass reinforced plastic products such as storage tanks and piping systems, filed for bankruptcy on July 29, listing $5.4MM in liabilities, including $2.0MM to HSBC.The company's recent financial difficulties are largely a result of a sizeable but ultimately unprofitable contract that the company entered into in 2018. The company was receiving financial support from its parent company in Europe, but due to continued losses and weak order intake over the last months it became impossible for the parent company to continue supporting its Canadian subsidiary. EY was appointed bankruptcy trustee.
Noreast Foods, a Scarborough, Ontario-based manufacturer of tofu and bean products, was placed in receivership on July 26 on application by TD, owed approximately $3.4MM. Packaging its products under brands such as Northeast, Guway, Sou Fresh and Sou Organic, the company claims to hold a significant market share of tofu sales in the Greater Toronto Area but has been experiencing financial difficulties recently. Albert Gelman Inc. was appointed receiver. Counsel is Blaney McMurtry for the applicant and Aird & Berlis for the receiver.