British Confectionery Company and British Baazar Company, a St. John's, Newfoundland and Labrador-based manufacturer of specialty paper, obtained protection under the CCAA on April 29. The company, which focuses on manufacturing break-open lottery and promotional products, had previously filed an NOI on November 5. Attributing its financial difficulties to a variety of factors including product recalls, a fire at its production facility, and lower margins on new contracts, the company was able to attract an investor during the proposal proceedings. The investor's offer contained several conditions though, including the requirement that the province participate in providing financing to the company. Though the province seemed willing, it indicated that as a result of the calling of a provincial election, there would be a moratorium on such decisions until after the new government is installed. The company therefore converted its proceedings from the BIA to the CCAA to allow additional time for the province and investor to consider the transaction. Deloitte is the monitor. BoyneClarke is counsel for the company.
Ventana Windows & Doors Inc., a Toronto, Ontario-based vinyl window and door manufacturer, was placed in receivership on April 25 on application by RBC. BDO was appointed receiver. Aird & Berlis is counsel for for the applicant.
Best Made Toys International, a Toronto, Ontario-based manufacturer of plush toys for the wholesale market, was placed in receivership on April 23 on application by BMO, owed approximately $30.1MM. Founded in 1952, the company supplied products to major North American retailers such as Walmart, Target and Kroger but recently had been unable to meet customer demand due to manufacturing and supply chain disruption, which led to widespread order cancellations, penalties, large accounts receivable write-offs and lost future business. A sales process was conducted in March but failed to generate any bids for the business. Deloitte was appointed receiver. Counsel is BLG for the applicant and Goodmans for the company.
Rothmans, Benson & Hedges, a Toronto, Ontario-based company that produces and sells tobacco products in Canada, filed for protection under the CCAA on March 22. It is the third and last of the big three Canadian tobacco companies to obtain creditor protection this month. The company has two primary business segments: it is the second largest supplier of traditional tobacco products in the Canadian market, and it sells and distributes IQOS products, smoke-free electronic tobacco devices which it purchases from Philip Morris. In addition to two class action proceedings commenced against the company in Quebec, the company is a defendant to a number of other putative class actions, individual actions and government-initiated proceedings throughout Canada. The company has been held liable for approximately $13.5B as a result of the Quebec Appellate decision. EY was appointed monitor. Counsel is McCarthy Tétrault for the company, Cassels Brock for the monitor and Gowling WLG for Philip Morris.
Western Rocky Mountain Industries, a Grand Forks, British Columbia-based manufacturer of commercial waste disposal containers, was placed in receivership on March 18 on application by RBC. Grant Thorton was appointed receiver. Counsel is McMillan Dubo for the applicant and Thomas Butler for the company.
JMG Metal, a Woodbridge, Ontario-based metal manufacturer specializing in custom component production for the furniture industry, filed for bankruptcy on March 12, listing approximately $1.0MM in liabilities. BDO is the bankruptcy trustee.
Imperial Tobacco, a Montreal, Quebec-based cigarette company that manufactures tobacco products for brands such as Marlboro and Pall Mall, filed for protection under the CCAA on March 12. The company leads the tobacco industry with roughly 48% market share of all legal sales in 2018. The two other major Canadian manufacturers and distributors of tobacco products are Rothmans Benson & Hedges and JTI-Macdonald, the latter of which was granted court protection under the CCAA on March 8. The company is currently facing an existential threat from litigation across Canada, including multiple class actions and government claims seeking to recover health care costs (collectively, the "Tobacco Litigation"). Earlier this month, the Quebec Court of Appeal upheld a 2015 ruling in a lower court that found the tobacco companies concealed the health risks of smoking from the public. The plaintiffs in the Tobacco Litigation are seeking hundreds of billions of dollars in damages, which significantly exceed the company's total assets. FTI Consulting was appointed monitor. Counsel is Osler for the company and Davies for the monitor.
JTI-Macdonald Corp., the third largest tobacco company in Canada, obtained protection under the CCAA on March 8. Based in Mississauga, Ontario, the company is indirectly owned by Japan Tobacco and has approximately 500 employees and 1,300 suppliers. Each year, it pays approximately $1.3B in taxes to the federal and provincial governments. The company, along with Imperial Tobacco Canada Limited and Rothmans, Benson & Hedges, are defendants in two significant class action proceedings that were tried in Quebec. In June 2015, the companies were found liable for moral damages. The defendants appealed, but learned earlier this month that their appeal had been rejected, making them liable for over $500B in estimated damages, with the judgment potentially becoming enforceable immediately. The company is also the subject of significant health care cost recovery litigation that was commenced as a result of legislation passed in various provinces related to alleged "tobacco related wrongs". Asserting that it has no liability in respect of the litigation claims, the company will attempt to appeal to the Supreme Court of Canada while under creditor protection. It will also use the proceedings as a platform to find a collective solution for the benefit of all stakeholders. Deloitte was appointed monitor. Counsel is TGF for the company and Blakes for the monitor. BlueTree Advisors was appointed CRO.
Erwin Hymer Group North America, a Cambridge, Ontario-based recreational vehicle ("RV") manufacturer, was placed in receivership on February 15 on application by Corner Flag, owed approximately. $5.1MM. Pursuant to a share purchase agreement entered into in September 2018 (the "Thor Transaction") for $3.1B, Thor Industries was to acquire Erwin Hymer Global Group, an international group of entities engaged in the manufacture and sale of RVs. However, following the execution of the agreement, Thor became aware of certain long-standing financial irregularities in the North American entity's books and records. As a result, the parties amended the agreement to exclude the North American entities from the scope of the Thor Transaction. Subsequently, Erwin Hymer Global Group's parent company, EHG SE, divested its ownership interests in the North American entity to Corner Flag, a special purpose Delaware limited liability company that was formed to acquire these ownership interests. Since January and the discovery of the financial irregularities in the company's financial reporting, the company has been experiencing significant operational, liquidity and governance challenges, which have rendered it unable to continue operating in the normal course. A number of key management and employees have been suspended pending the outcome of an investigation into the financial irregularities and all but one of the directors of the company have resigned. The company currently has in excess of $300.0MM in liabilities and does not have sufficient funding to support its 850-employee workforce. During these proceedings, it is expected that Corner Flag will provide additional funding for, amongst other things, the payment of terminated employees' unpaid vacation pay. Alvarez & Marsal was appointed receiver. Counsel is Blakes for the applicant, Aird & Berlis for Jeff Merk, the director of the company and Osler for the receiver.
Sural Québec ("SQ"), a Victoriaville, Quebec-based greenfield plant that manufactures and commercializes aluminum rods, and Sural Laminated Products of Canada ("SLPC"), a Becancour, Quebec-based rod plant, filed for protection under the CCAA on February 11, listing approximately $142.0MM in liabilities, including $39.3MM to Investissement Québec and $41.3MM to BMO. The two companies are part of a large global group of privately owned companies operating four rod mills in the aluminum sector. In 2014, this group acquired the Becancour plant from Alcoa Canada and entered into a 10-year supply contract with it to provide SLPC with 100,000 metric tons per year of molten aluminum. SQ has experienced higher losses than forecast primarily because of schedule delays caused by, amongst other things, the death of a worker and construction cost overruns. The problems experienced by SQ impacted the SLPC operations. Furthermore, in fall 2018, Alcoa informed SLPC that its molten metal production would no longer be sufficient to meet SLPC's demand. Compounding these existing issues, the US announced in May 2018 that tariffs of 25% on imports of Canadian steel and 10% imports of Canadian aluminum would take effect on June 1, 2018. These tariffs significantly increased working capital pressures on the group as it scrambled to negotiate price concessions with its metal supplier and price premiums with its clients. By February 2019, SLPC's indebtedness to Alcoa increased to approximately $40.0MM, and it sent the company a notice requesting payment. PwC was appointed monitor. Counsel is Norton Rose Fulbright for the companies, Fasken for PwC, BLG for BMO and Lavery de Billy for Investissement Québec.