The Installation Group, a Sudbury, Ontario-based installer of telecommunications systems with an exclusive contract with Bell Canada for installation services across Northern Ontario, Northern Quebec, Manitoba and Saskatchewan, was placed in receivership on November 12 on application by BNS, owed approximately $599.0 thousand. Seeking growth, the company expanded its operations in or around 2016 to include the installation of satellite/internet services with new partners in rural areas. The expansion proved unsuccessful and by early 2018 the company had exhausted all of its financial resources. Shortly thereafter, management discovered that proper financial records were not being maintained by the company's internal accountant and payroll source deductions and sales tax had not been remitted since March 2017, resulting in an amount owing to CRA of approximately $1.7 million. A BIA proposal was filed by the company in December 2018 which necessitated the company obtaining a capital injection to, among other things, pay out BNS and pay off CRA's deemed trust claim within 6 months. None of the lenders approached were willing to finance the company, but one offered to purchase the company's assets as a going concern. The sale will be completed through a receivership. BDO is the proposal trustee and receiver. Counsel is Lipman, Zener & Waxman for the applicant, Chaitons for the BDO, Minden Gross for Firepower Capital and BLG for Bell Canada.
North American Fur Auction, an international fur auction house with a history dating back to 1670 and the historic Hudson's Bay Company, obtained protection under the CCAA on October 31. Based in Toronto, the company sells in excess of USD $200.0 million worth of fur products annually at the auctions it conducts. The company also lends funds to farmers/ranchers who use the loans to fund the development of minks. The farmers are then contractually bound to deliver those mink to NAFA for auction. The annual lending cycle ends around the end of November. Thereafter, the mink are harvested and turned into pelts for auction. Historically, the company has bridged the gap between lending and harvest with funds from a syndicate of lenders led by CIBC. The credit facilities typically range from $40.0 to $60.0 million, depending on the time of year. The syndicate made demand in the summer of 2019, however, and ultimately stopped funding in late September. Facing a looming liquidity crisis, the company negotiated an LOI with SAGA Furs, one of its principal competitors, to acquire certain of its loans. The proceeds from this transaction, along with DIP funding in the CCAA proceedings, will allow the company to harvest its current mink crop and thereafter reconsider its business operations. Deloitte was appointed monitor. KPMG is financial advisor to the company. Alvarez & Marsal is financial advisor to CIBC. Waygar Capital is providing a $5.0 million DIP loan. Counsel is Blaney McMurtry for the company, Miller Thomson for the monitor, TGF for BDC, Blakes for CIBC and Aird & Berlis for Waygar Capital.
NTG Clarity Networks (TSX-V:NCI), a Markham, Ontario-based telecommunications company, was placed in interim receivership on October 9 on application by RBC, owed approximately $7.8 million. NTG, along with a related Egyptian company, provide network, IT, and infrastructure support to telecommunication service providers in Egypt, Saudi Arabia and elsewhere in the Middle East. Due to constrained liquidity largely caused by NTG’s inability to sell new software technology on which it had spent approximately $5 million to develop, the company was transferred to RBC’s Special Loans Department in August, 2016 and has remained there ever since. In 2017, it was discovered that NTG had overstated its accounts receivable by counting certain work in progress as receivables, resulting in a $2.2 million over-advance. The over-margin position has recently increased to approximately $3.7 million and RBC has learned that, among other things, two major contracts had been cancelled and the corresponding receivables written off, and numerous customers were disputing invoices. RBC therefore moved for the immediate appointment of an interim receiver to oversee collections and secure receipts until the time that a receivership application can be heard. Grant Thornton was appointed interim receiver. Aird & Berlis is counsel for the applicant.
Icon Stone & Tile, a Calgary, Alberta-based stone fabrication and installation business, filed for bankruptcy on September 3, listing approximately $2.8 million in liabilities, including $1.6 million to HSBC. Grant Thornton was appointed bankruptcy trustee.
Machine Works Industrial, a Fort Saskatchewan, Alberta-based contractor specializing in welding and steel fabrication, was placed in receivership on August 13 on application by RBC, owed approximately $2.0 million. Deloitte was appointed receiver. Counsel is Burnet, Duckworth & Palmer for the applicant and Duncan Craig for the receiver.
Schendel Mechanical Contracting, an Edmonton, Alberta-based mechanical contractor, was placed in receivership on July 19 on application by ATB Financial, owed approximately $18.1MM. One of Alberta's largest construction companies, the company had been successful for decades but hit a rough patch in late 2018 when work on one of its major projects, the Grande Prairie Regional Hospital, was halted by the Province of Alberta. The work stoppage affected Schendel's profitability, eventually causing it to default on amounts owing to ATB. In March 2019, ATB issued demand letters and notices of intention to enforce security. In response, the company filed an NOI and has been working hard to find a lifeline that would allow it to continue in business. On July 10, it filed a proposal to ATB and its other creditors. ATB immediately moved for an order deeming the proposal to be refused and an order appointing a receiver. ATB's position was that it had a veto over the proposal by the solo nature of its secured claim and it intended to vote against the proposal, based on a host of factors, including its perception that it would fare better in a bankruptcy or receivership than under the proposal. The orders were granted and PwC was appointed receiver. Counsel is McCarthy Tétrault for the applicant, Bennett Jones for the company, Miller Thomson for the receiver and MLT Aikins for the proposal trustee, Grant Thornton.
VistaCare Communications, a Bedford, Nova Scotia-based telecommunication infrastructure service provider, filed an NOI on June 19. Employing approximately 350 full time employees, the company experienced exponential growth between 2015 and 2018, with revenue growing from $24.0MM to $50.6MM. In 2018, it was discovered that the company's financial results had not been properly recorded which resulted in an adjusted revenue value which was lower than expected, while the company's cost base remained high. The company responded by immediately replacing certain management positions and working to implement operational improvements, but the company's financial position has remained a challenge. The company's loan with BMO is currently $6.0MM out of margin and the company has made the decision that a formal restructuring is required. Grant Thornton is the proposal trustee. Counsel is Stewart McKelvey for the company and Cox & Palmer for BMO,
Cross Country Installation & Service, a Toronto, Ontario-based equipment installation and project management company, which provides its installation services to communities all across Canada, filed for bankruptcy on May 8. PwC is the bankruptcy trustee.
Groupe Paquette Mécanique du Bâtiment Inc., a Laval, Quebec-based mechanical contractor, had its assets placed in receivership on May 6 on separate applications by Caisse Desjardins, owed approximately $7.0MM and Fiera, owed approximately $3.2MM. MNP was appointed receiver over the company's equipment, tools and rolling stock and BLT Lapointe was appointed receiver over the remaining assets. Counsel is Dentons for Fiera, Gowlings WLG for Caisse Desjardins and Miller Thomson for the company.
Innova Global, a Calgary, Alberta-based provider of noise control and waste recovery system solutions for industrial sites worldwide, was placed in receivership on April 1 on application by ATB, owed together with a syndicate of other lenders approximately $74.2MM. In February 2019, the company advised ATB that it anticipated defaulting on its credit agreement because it was unable to make a required repayment of $2.5MM due on February 29. Despite several extensions and extensive negotiations, the parties have been unable to find a collaborative solution to address the liquidity challenges. When TriWest Capital Partners, the company's indirect private equity sponsor, advised in March that it was unwilling to either invest capital into the business or purchase all or a portion of the lenders' security, ATB demanded repayment of the debt. PwC was appointed receiver. Counsel is McCarthy Tétrault for the applicant and Stikeman Elliott for the company.