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.
54 Shepherd Road Inc. and 60 Shepherd Road Inc., owners of real property in Oakville, were placed in receivership on October 24 on application by FirstOntario Credit Union, owed approximately $2.6 million. The debtors were planning on developing a high-rise, mixed residential/commercial use project on the property but were unable to obtain construction financing, which, according to the debtors, was due to the structure of its existing financing from syndicated investors. With the debtors unwilling to accept the terms of a forbearance agreement that included bringing property tax and interest payments up-to-date, FirstOntario moved to enforce its security. msi Spergel (GRIP) was appointed receiver. Counsel is SimpsonWigle for the applicant and McCarthy Tétrault for the companies.
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.
DEL Equipment, a Newmarket, Ontario-based truck body builder and truck equipment upfitter, filed for protection under the CCAA on October 22. Operating nation-wide from six manufacturing and distribution locations, the company is currently facing a liquidity crisis and is in significant arrears to many of its suppliers. In June 2017, Gin-Cor Industries, a company that operates in the same field, acquired a 40% equity stake in DEL and assumed management control of the company. The majority of the anticipated business synergies failed to materialize, however, and in July 2018 the transaction was terminated and control of the business reverted back to DEL's previous sole shareholder. Despite this, the company's operational challenges have continued, and DEL is now more than $8.0 million in arrears to its supplier base, many of whom have begun to compress payment terms. Adding to this, the company has become embroiled in a payment dispute; a customer inadvertently remitted approximately $874.1 thousand to Gin-Cor instead of DEL and Gin-Cor is now refusing to return the funds. While under creditor protection, the company will seek to resolve the payment dispute. It also will attempt to complete a going-concern sale of the business or a restructuring transaction. MNP was appointed monitor. Counsel is Goodmans for the company and GSNH for the monitor.
TamTan Inc., a real estate holding company whose primary asset is a commercial property in Scarborough, Ontario, along with related party EZ Food Group, was placed in receivership on October 16 on application by Roynat, owed approximately $2.4 million. An RCMP investigation into the company's affairs resulted in the federal prosecution of the company's principal, and in February 2019, a restraint order was registered against the property on the grounds that the Attorney General alleges that the property is an offence-related property. Certain of the company's bank accounts were also frozen, and it soon lapsed into default under its loan agreement with Roynat. Roynat gave the company an opportunity to market and sell the property and repay its obligations, but multiple attempts to sell the property have failed and Roynat has lost confidence in the company's ability to facilitate a sale outside of a court process. Spergel (GRIP) was appointed receiver. Blakes is counsel for the applicant.
3070 Ellesmere Developments, an Ontario corporation that owns a vacant parcel of land municipally known as 3070 Ellesmere Road, Scarborough, Ontario, was placed in receivership on September 13 on application by 2478888 Ontario Inc., owed approximately $6.6 million. On August 20, the company filed an NOI and subsequently served materials seeking, among other things: the appointment of a Chief Restructuring Advisor, the appointment of a sales process advisor and the approval of a stalking horse purchase agreement. The lender opposed this motion on the basis that it was in direct contravention of its agreement with the debtor. It also took issue with the anticipated costs of the debtor-driven proceedings, arguing that a Chief Restructuring Advisor, a sales process advisor and a proposal trustee are not all required to conduct a sale process for a vacant parcel of land that a receiver alone could run at a significantly lower cost in a substantially similar timeline. RSM was appointed receiver. Counsel is TGF for the applicant and Cassels Brock for the company.
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.
Forever XXI ULC, the Canadian operating subsidiary of US-based retailer Forever 21, obtained protection under the CCAA on September 29. The filing occurred on the same day the company's parent filed for Chapter 11 bankruptcy protection in the US. In Canada, the company operates 44 retail stores in malls across the country, selling apparel, accessories and other products under the Forever 21 and other related brands. While the company's initial expansion into the Canadian market in 2001 was promising, it has struggled to maintain profitability, and the vast majority of its stores are unprofitable. As part of its global restructuring plan, Forever 21 has determined that it will exit substantially all of its international markets, including Canada. Following a pre-filing bid solicitation process, the company selected Gordon Brothers and Merchant Retail Solutions to jointly conduct an orderly liquidation of the Canadian inventory and other assets. PwC was appointed monitor. Alvarez & Marsal is the company's financial advisor. Counsel is Osler for the company, Goodmans for the monitor, Norton Rose Fulbright for lender J.P. Morgan Chase, Cassels Brock for Gordon Brothers, Torys for Cadillac Fairview and Gardiner Roberts for Oxford Properties.
Applefest Lodge, a retirement residence in Brighton, Ontario, was placed in receivership on October 4 on application by Pace Savings & Credit Union, owed approximately $6.4 million. Originally opened in 1984, the residence was expanded in 2010 by opening a new wing with an additional 31 suites, resulting in a total of 67 suites. The expansion, however, created financial difficulty for the company due to construction delays, expensive financing and low occupancy and Stephen Bardo, the residence's sole officer and director, turned to Bill Dillane, a personal friend and private investor for funds to cover the shortfall. In July 2019, Bardo passed away. He had no will, and there was no mechanism in the residence's articles of incorporation to replace him as officer or director. With no other signing officer for the company, Dillane continued to fund expenses personally and then reimburse himself using pre-signed cheques provided by Bardo prior to his death. While an essential arrangement, it is not sustainable, and Pace therefore sought the appointment of a receiver who could borrow money while managing and preparing the residence for a sale. Grant Thornton was appointed receiver. Counsel is Harrison Pensa for the applicant and Aird & Berlis for the receiver.
B&W Heat Treating Canada, a Kitchener, Ontario-based supplier of heat-treating services for customers with aluminum, steel, alloy or metal parts that require heat treatment, was placed in receivership on September 27 on application by Cerberus Business Financial, owed together with certain other lenders approximately US $3.0 million. Until several years ago, the largest and most profitable part of the company's business was processing engine blocks for its main customer, which represented approximately 37% of the company's revenue. In 2015/2016, the customer transferred its business to Mexico, away from the company. As a result of the loss of business, the company has suffered operating losses for several years. Despite attempts to scale back costs, the company was unable to return to profitability and made the decision to sell the business and its assets. A sale process has led to a proposed transaction with Hilco, which will be completed through the receivership. Farber was appointed receiver. Counsel is McMillan for the applicant and Chaitons for the company.