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.
605673 British Columbia Ltd., doing business as A&J First Aid, a Chetwynd, British Columbia-based supplier of mobile first aid treatment centres and occupational first aid attendants for the construction industry, was deemed bankrupt on March 13 on application by TD, owed approximately $516.4M. The company had not been operational since late January 2019, and in February 2019, Expert Bailiffs, at the direction of CRA, seized 20 of the company's vehicles in respect of outstanding amounts owing to CRA. PwC is the bankruptcy trustee.
Ascent Industries (CSE:ASNT), which is in the business of cultivating, producing, processing, developing and distributing cannabis and cannabis-based products in British Columbia and Nevada, US, filed for protection under the CCAA on March 1, owing approximately $7.0MM to Gulf Bridge, a Cayman Islands-based company. Since cannabis is a regulated product, the company's ability to generate revenue is largely dependent on its holding the necessary licences. In September 2018, Health Canada partially suspended the company's cannabis licences, which are held by its subsidiary Agrima Botanicals, as a result of Agrima's failure to meet certain compliance requirements. In November 2018, Health Canada further notified Agrima of its intention to revoke its licences for alleged contraventions of the Cannabis Act. Due to Health Canada's suspension and proposed revocation of the company's cannabis licences, the company is no longer able to legally produce or distribute cannabis in Canada. This has decimated the company's ability to generate positive cash flow, and is the primary cause of its financial difficulties and corresponding insolvency. In addition, the suspension and proposed revocation of the licences has made it virtually impossible for the company to raise money through the capital markets to resolve its liquidity problems. The company engaged Clarus Securities to assist it in conducting a sale and investment solicitation process for its business. Although the company was ultimately unable to conclude a sale transaction, a number of potential purchasers remain interested. EY was appointed monitor. Counsel is BLG for the company and Fasken for Gulf Bridge.
Nautilus Minerals (TSX:NUS), the Vancouver, British Columbia-based parent company and sole owner of a group of 42 companies (together, the "Nautilus Group") that is in the business of seafloor resource exploration and development, sought protection under the CCAA on February 21. The Nautilus Group, which owes approximately $36.0MM (USD) to its creditors, including $18.3MM to Deep Sea Mining Finance ("DSMF"), has invested significantly in the design and construction of specialized equipment for the purpose of conducting seafloor mineral mining (the "Seafloor Production System"). The parent company has recently encountered difficulty raising additional capital to continue construction of the Seafloor Production System and the continuation of its business. The mining operations do not yet generate any revenue and will not do so until the Seafloor Production System is completed. However, due to lack of funding, construction of the system has stalled. Over the past year, the company has unsuccessfully sought to secure additional financing. The company requires an immediate stay of proceedings under the CCAA to give it the breathing room it requires to implement a sale and investment solicitation plan and complete a sale or restructuring transaction. During these proceedings, DSMF is prepared to advance up to $4.0MM in interim financing. PwC was appointed monitor. Counsel is Fasken for the company and Cassels Brock for the monitor.
Quadriga Fintech Solutions, a Vancouver, British Columbia-based company that operates an online cryptocurrency exchange platform (the "QCX Platform"), filed for protection under the CCAA on February 5, owing over $260.0MM to certain of its users. The QCX Platform was launched in December 2013 and is used to facilitate the purchase and sale of cryptocurrencies for the company's 363,000 registered users. A user who wants to transfer bitcoin or other cryptocurrency requires a wallet. A wallet has an address to each user and is comparable to a piggybank that is located on a user's phone or computer. Wallets are described as either hot or cold. A hot wallet is located on a server and is used for transactions that require a quicker turnaround. A cold wallet or cold storage is located offline and is a safe space to secure coins. Any coins credited to a user on the platform were stored by Quadriga, either in a hot or cold wallet. Only a minimal amount of coins were kept on the server in a hot wallet. The normal procedure was to move the coins to a cold storage as a way to protect the coins from hacking or other virtual theft. The company cites several factors for its financial difficulties and current liquidity crisis. First, the company notes that it was never able to obtain a corporate bank account because the banks did not want to deal with it because of the cryptocurrency business. The company therefore had to use personal bank accounts and third party payment processors. In January 2018, CIBC froze an account that held approximately $25.7MM being held on Quidriga's behalf. The funds were paid into court and eventually released, but Quadriga has been unable to find a banking institution to accept the bank drafts. More recently, in December 2018, Gerry Cotten, Quadriga's founder and sole officer and director, passed away unexpectedly at the age of 30 while in India. Gerry ran the business through his laptop, which is encrypted and password protected. To date, and despite many expert attempts, no one has been been able to hack into the computer. Of critical concern is that an estimated $180.0MM of coins which Gerry moved to cold storage will essentially be lost, as Gerry alone held the security keys for the location of the cold wallets. The decision to enter bankruptcy protection was made to allow the company breathing room to investigate whatever stores of cryptocurrency may be available and negotiate the bank drafts available to the company. The proceedings will also stay any potential legal actions that users may have commenced had they been unable to access their funds. The company is also exploring the potential sale of its operating platform, which may have significant value and could lead to value being realized for the benefit of the company's creditors. EY was appointed monitor. Counsel is Stikeman Elliot for the monitor and Stewart McKelvey for the company. Several firms are vying for the role of representative counsel for the platform's users.
Resource Capital Gold and three of its subsidiaries, Flex Mining and Exploration, Maritime Dufferin Gold, and Maritime Gold, filed NOIs on January 28. The Vancouver, British Columbia-based group is an emerging precious metals developer and producer with a number of late stage exploration and development gold assets in Nova Scotia. After commencing operations at its Dufferin property in 2018, the group ran out of funding to continue operations. During the NOI process, the group intends to complete a sales and investor solicitation process. PwC is the proposal trustee. Counsel is DLA Piper for the secured creditor, Sprott Resource Lending, and Clark Wilson for the debtors.
RMK Investments, a Vancouver, British Columbia-based company that sells and installs the Hunter Douglas brand of home interior blinds and custom-made draperies which were sold exclusively through the Hudson's Bay ("HBC") Department stores, filed a proposal on January 21, listing $882.6M in liabilities, including $307.5M to Hunter Douglas Canada. Under the terms of its contract with HBC, the company was not allowed to perform any of its own direct marketing to customers. Previously, the company had the advantage of selling the Hunter Douglas brand of blinds which were not available to much of the competition. This allowed the company to operate its business on a high volume and high margin basis. In the past several years, however, big box retailers such as Costco and Home Depot also began to sell the Hunter Douglas brand of blinds. The increased competition and existing marketing constraints on the company reduced its margins, ultimately resulting in negative profitability. The company will cease operations on January 31. The Bowra Group is the proposal trustee.
Gymboree Group, a San Francisco, California-based chain of specialty retail stores for children’s apparel with operations across the US, Canada and Australia filed for bankruptcy under Chapter 11 in the United States Bankruptcy Court on January 17. Concurrently, Gymboree ("Gymboree Canada" or the "Company") filed an NOI on January 17, listing $9.4M of liabilities, including $8.9M of liabilities that are owed to entities that are subsidiaries of the Gymboree Group. The Company operates 49 retail stores in Alberta, British Columbia, Manitoba, Nova Scotia and Ontario. A group of agents including Great American, Tiger, Gordon Brothers, and Hilco (the "Agents") will be leading liquidation efforts across the US and Canada. KPMG is the proposal trustee. Counsel is Norton Rose Fulbright for the Company, Osler for the proposal trustee and Cassels Brock for the Agents.
International Herbs (B.C.), a Surrey, British Columbia-based producer and distributor of fresh herb products to retail grocers across Canada with operations in British Columbia and Ontario, filed for bankruptcy on January 9, listing $5.3MM in liabilities, including $571.7M to BMO and $604.4M to Coastal Fresh Farms. The Bowra Group is the bankruptcy trustee.
WEQ Holdings (formerly WesternOne) (TSX:WEQ), a Vancouver, British Columbia-based regional equipment rental provider of aerial lifts and heat solutions, was placed in liquidation on December 17. In October, United Rentals entered into an agreement to acquire the assets of WesternOne Rental & Sales from its parent company for approximately $91.8MM in cash. The Bowra Group was appointed liquidator. Counsel is Farris for the company and Lawson Lundell for the liquidator.