Forma-Con, a Concord, Ontario-based affiliate of Bondfield, a major Ontario-based construction company, was placed in receivership on November 19 on application by Bridging Finance as agent for 2665405 Ontario. Certain specific, non-core assets of Bondfield, as well as the real property known municipally as 131 Saramia Crescent in Vaughan, Ontario are also subject to the receivership order. Bondfield continues to operate in the normal course and is not subject to the receivership order. KSV was appointed receiver. FAAN Advisors is a financial advisor to Bondfield. Counsel is Goodmans for the applicant, Torys for the receiver, BTZ for the directors and officers of Bondfield, Osler for Bondfield, BLG for Zurich Insurance Company, McCarthy Tétrault for BMO and TD, each as agent, Chaitons for BMO, as agent, Koskie Minsky for LIUNA Local 506 and IUOE Local 793 and Cassels Brock for Infrastructure Ontario. The receivership application materials are sealed.
Cangap et al., a Toronto, Ontario-based private equity group that seeks secured lending opportunities with a focus on management buyouts, acquisitions and consolidations, was placed in receivership on November 15 on application by Creative Wealth Monthly Pay Trust and Creative Wealth Capital (together the "Trust"). The Trust discovered that it is likely the victim of a scheme perpetrated by the respondents to misappropriate approximately $10.7MM in investments. As part of an overarching investment vehicle between the applicants and respondents, the Trust invested substantial funds in the respondent limited partnership, Cangap Merchant Capital LP ("CMC LP"). However, since August 2015, CMC LP has failed to remit any payments to the Trust; furthermore, the Trust has discovered that CMC LP is no longer listed as an active entity, contrary to its contractual obligations. To date, CMC LP and its general partner, Cangap Merchant Capital Corp. ("CMC GP"), as well as the sole director and officer of CMC LP and CMC GP, Emlyn David, have refused to provide the Trust with any financial statements, reports or responses. The Trust also allege that Mr. David has apparently started to sell or dissipate assets, and that he has co-mingled finances. In the past several months, the Trust discovered that CMC LP and/or CMC GP had allegedly bought out Skyservice Investments - Canada's largest operator and provider of aviation services - as well as related senior and subordinated debt. Skyservice eventually sold a majority of its equity interest to InstarAGF Asset Management. The Trust alleges that it believes that Mr. David financially benefited from the sale and never advised it of this transaction. Given the compete absence of correspondence and financial reporting of CMC LP, CMC GP and Mr. David, as well as the applicants' suspicion that Mr. David has misappropriated the Trust's funds, the applicants can no longer reasonably have confidence in Mr. David. Fuller Landau was appointed receiver. Counsel is Gardiner Roberts for the applicants and Woolgar VanWiechen Cosgriffe Ducoffe for the respondents.
Hashtag Electric, a Concord, Ontario-based electrical contractor, filed for bankruptcy on November 14, listing $334.1M in liabilities, including $73.2M to CIBC. Dodick Landau is the bankruptcy trustee.
Stantive Technologies Group, a Kingston, Ontario-based enterprise software provider focused on the development and deployment of its proprietary content management platform, OrchestraCMS, filed an NOI on November 14, listing $19.1MM in liabilities, including $1.4MM to Runway Finance Group and $1.9MM to Mamta Trust. The company relies on recurring revenue generated by subscription renewals through its main host platform, Salesforce.com. Salesforce, an American corporation based in San Francisco, is the company's most important relationship: OrchestraCMS is built entirely on Salesforce's platform. Although the company owns all of the intellectual property related to OrchestraCMS, the platform is not operable outside of the Salesforce ecosystem. In exchange for the use of the Salesforce platform, the company remits an amount equal to 12.5% of its recurring revenue. Currently, the company is in default of their agreement and owes Salesforce approximately $259.2M (USD). The company has been facing liquidity issues as a result of its debt structure and, for the past several months, has been working with EY, the proposal trustee, to try to address these issues. During these NOI proceedings, two numbered companies have agreed to provide up to $800.0M in DIP financing. PwC was engaged as financial advisor to the proposed DIP lenders. Counsel is TGF for the company and BTZ for the DIP lenders / certain secured creditors.
Money Gate Mortgage Investment Corporation, a North York, Ontario-based mortgage investment corporation, was placed in receivership on November 6 on application by the Ontario Securities Commission ("OSC"). Between 2014 and 2017, the company raised approximately $11.0MM from approximately 155 investors. These funds were then pooled and loaned to borrowers, which loans were secured by residential and commercial mortgages. It is alleged, however, that the company was operating a far riskier mortgage investment business than the one represented to investors. Morteza Katebian and his son, Payam Katebian - the company's principals - are respondents in an enforcement proceeding before the OSC, in which it is alleged that they defrauded investors through misrepresentations contained in disclosure documents and committed other violations of Ontario securities law. In April 2017, the OSC obtained a temporary cease trade order, which is still in effect and which prevents the company from raising any more capital. The company later advised investors that it was winding down its operations; despite this announcement, however, the company continued to make loans and it is alleged that the principals diverted over $1.3MM in corporate funds for their personal benefit. As a result of this recently discovered evidence, the allegations in the OSC proceedings have been expanded to include fraud. In October 2018, the OSC issued a freeze direction. Grant Thornton was appointed receiver and manager. Jamie Gibson and Dihim Emami are counsel to the OSC.
58, 76 and 82 Old Kennedy Development, three related companies owning development properties in Markham, Ontario, filed NOIs on October 26. KSV was appointed proposal trustee. Counsel is GSNH for the company and Bennett Jones for the proposal trustee.
Fluid Brands, the Toronto, Ontario-based parent company of Bowring and Bombay, home interior and decor retail store chains, filed an NOI on October 25, listing approximately $50.0MM in liabilities, including $23.5MM to CIBC and $14.8MM to Isaac Bennet Sales Agencies. The company acquired the Bombay and Bowring businesses in 2014 through a prior restructuring of those businesses pursuant to the CCAA but has not been able to turn the businesses around: Bombay lost approximately $3.1MM in the last year and Bowring lost $1.9MM during the same period. These operating losses, coupled with service of demands for repayment by certain of the company's secured creditors, resulted in the company filing an NOI. This will be the third insolvency restructuring for the Bombay chain of stores and the second insolvency restructuring for the Bowring stores. Over the next 60 days, the company intends to liquidate as much inventory as possible and to close certain locations as inventory levels drop. The company will assess the results of the holiday season liquidation before determining what its ultimate proposal to creditors will be. Merchant Retail Solutions and Gordon Brothers will be spearheading the inventory liquidation process. CIBC will be providing a DIP loan during the proposal proceedings. Richter is the proposal trustee. Counsel is Torkin Manes for the company, Gowlings for CIBC, BLG for Isaac Bennet Sales Agencies and Osler for the proposal trustee.
Northern Precast, a Sharon, Ontario-based manufacturer of precast concrete protects, had certain of its property placed under receivership on October 19 on application by 2347186 Ontario. Farber was appointed receiver.
1663284 Ontario, an Ottawa, Ontario-based company, filed for bankruptcy on October 16, owing $45.0M to CRA. Raymond Chabot is the proposal trustee.
2332361 Ontario, whose primary asset is a commercial office and retail complex located at 133-139 King Street West, Brockville, Ontario, was placed in receivership on October 10 on application by the company's only known secured creditor, First National Financial, owed approximately $1.6MM. The commercial complex, which has a current vacancy rate of 60%, is operating at a loss and the company can no longer cover the operating costs from the rent it receives from tenants. Given this failure to make payments, the complex's maintenance supplier has refused to make certain required repairs which the company is responsible for under its leases. As a result, the company is concerned that the tenants may begin withholding rents, which would further erode the company's liquidity. The court appointed KSV Advisory as receiver and approved a sale process for the company's real property. The appointment of a receiver will assist to normalize the operations at the complex and allow a receiver to negotiate with Elections Canada with respect to its possible lease of space beginning in November 2018. KSV intends to retain Jones Lang LaSalle, a recognized real estate brokerage, as the listing agent. To fund these receivership proceedings, First National will be providing up to $200.0M in financing. Counsel is Fasken for the applicant and Kramer Simaan Dhillon for the company.