Paladin Labs Canadian Holding Inc. and Paladin Labs Inc., Canadian debtors which are part of a global specialty pharmaceutical group (collectively, "Endo"), obtained recognition of Endo's Chapter 11 proceedings under Part IV of the CCAA on August 19. Endo’s recent financial performance has deteriorated significantly, largely due to a 55% year-over-year decline in the first half of 2022 from sales of Vasostrict, a branded pharmaceutical that has been one of the company’s leading revenue generators over the last several years. Endo’s highly leveraged capital structure – which consists of funded debt obligations in the aggregate principal amount of approximately US$8.15 billion, which are guaranteed by the Canadian debtors – has become unsustainable as a result of the company’s declining financial performance. The company is also under significant financial pressure due to onerous litigation expenses incurred from defending more than 3,500 lawsuits in a number of jurisdictions, including the US and Canada, largely relating to the marketing and sale of prescription opioids. KSV was appointed as information officer. Canadian counsel is Goodmans for the companies, Bennett Jones for the information officer, Stikeman Elliott for the Ad Hoc First Lien Group, Davies for McKesson Canada Corporation and Osler for Sanis Health Inc., Shoppers Drug Mart Inc. and Loblaw Companies Limited. By Dina Milivojevic
Relance D.P inc. and 9298-9524 Quebec inc., Trois-Rivières, Québec-based real estate companies, obtained CCAA protection on August 17. The business of the companies is to invest in distressed construction projects (typically condominiums) so that the projects can be completed and the units sold. The companies are subject to various litigation claims in relation to the projects, and intend to seek a global resolution of these claims under a CCAA plan. Mallette was appointed monitor. Counsel is Daigle & Matte for the companies. By Dina Milivojevic
Effenco Development Inc., a Montréal, Québec-based autotech company, filed an assignment in bankruptcy on April 6, listing assets of approximately $6.6 million and liabilities of approximately $17.5 million, including approximately $3.3 million to Banque de développement du Canada (Québec), approximately $2.4 million to Investissement Québec and approximately $1.1 million to BMO Financial Group. The company's key technology is an electric hybrid Active Stop-Start system that improves energy efficiency on heavy trucks as well as reduce their greenhouse gas emissions by 30%. The company's management attributes its financial difficulties to significant development costs, operational difficulties and insufficient sales, which led to a liquidity problem. Ultimately, management was unable to secure the necessary funding to continue the company's operations. MNP is the bankruptcy trustee. By Dina Milivojevic
Jeno Neuman et Fils Inc., a Montreal, Quebec based importer and distributor of women's clothing, filed an NOI on April 5, listing approximately $2.3 million in secured liabilities, including $1.6 million to A.Y.K. International Inc. ("AYK"), and $6.4 million in unsecured liabilities. EY is the proposal trustee. Counsel is Osler for the company, KRB for AYK and McMillan for EY as proposal trustee. By Dina Milivojevic
10542113 Canada Inc. & Flora I Ltd., Montreal, Quebec-based development companies, had a receiver appointed on March 30, on application by Romspen Investment Corporation, owed $21,682,685.87 as at December 31. Another purported creditor, 9186-9297 Québec Inc. (“Upbrella”), had brought a competing CCAA application, which Romspen opposed on the basis that the companies were single purpose real estate entities and the proposed CCAA proceedings amounted to no more than a liquidating CCAA. MNP was appointed as receiver. Counsel is Fishman Flanz for Romspen. By Dina Milivojevic
Coast to Coast Sunglasses Inc., a Montréal, Québec based retailer of optical products, was placed in receivership on January 10, on application by Caisse Desjardins de Rosemont-La-Petite-Patrie ("Caisse Desjardins"), owed over $7.5 million. The company began having liquidity issues in 2020. However, the extent of the issues was not known to Caisse Desjardins until 2021, when it learned that the company had made practically no sales since the spring of 2021 and that the accounts receivable appearing in the company's interim financial statements were not accurate, since amounts characterized as “accounts receivable” were actually goods that had been delivered to customers on consignment. As a result, the actual value of the company’s current receivables is practically nil. PWC was appointed receiver. Counsel is Janson Larente for Caisse Desjardins. By Dina Milivojevic
Rising Phoenix International Inc., a Montreal, Quebec-based student recruitment company, and various related entities, certain of which operated private colleges in Quebec, obtained CCAA protection on January 7. The vast majority of the students at the colleges are international (95% from India) and are attending the colleges as part of the "Study, Work, Immigrate" program implemented by Immigration and Citizenship Canada. The insolvency of the companies is attributable to, among other things: (1) the impact of the COVID-19 pandemic; (2) untimely and improperly financed expansions; (3) changes to the immigration process for international students; and (4) certain litigation and public relations issues faced by the companies related to the propriety of recruiting large numbers of English-speaking international students from India, the quality of education at private colleges and the fact that students were not required to learn French. Richter was appointed monitor. Counsel is Kaufman Lawyers for the companies, Stikeman Elliott for the monitor, Fishman Flanz and TGF for Firm Capital Mortgage Fund and KRB Lawyers for Gestion Levy Inc., the DIP lender. By Dina Milivojevic
Sonact Group Ltd., a Montréal, Québec-based company, was adjudged bankrupt on January 5, on application by Premuda SPA, an Italian maritime freight transportation business. In 2015, Premuda obtained an arbitration award and costs in the UK against the company for demurrage and heating costs which had accrued under a charterparty in connection with Premuda's charter of a vessel to the company to carry a cargo of fuel oil from Kavkaz to Nakhodka, Russia. Following an unsuccessful appeal, the company owed approximately $1.25 million to Premuda. After making various unsuccessful demands for payment and attempting to enforce the arbitration award and costs awards, Premuda brought a bankruptcy application. MNP is the bankruptcy trustee. Counsel is Clyde & Cie Canada for Premuda. By Dina Milivojevic
BlackRock Metals Inc., Blackrock Mining Inc., BRM Metals GP Inc. and Blackrock Metals LP, a Montreal, Québec-based group of companies whose main activity is the development and implementation of Project Volt, a multi-metallic ferroalloy project in the province of Québec, obtained protection under the CCAA on December 23. The companies are development-stage mining companies that have not yet completed construction of their facility. Consequently, the companies currently have no revenue-generating activities and the recovery of amounts recorded as assets in the companies' financial statements depends on the confirmation of the companies' interest in Project Volt’s underlying mining rights, their ability to finalize and secure construction financing, and future profitable production or proceeds from the operation of the business or the disposition thereof. The companies' bridge financing came to maturity on December 1, 2021, and $90,759M is now due and immediately payable to OMF Fund II H Ltd. (“Orion”) and Investissement Québec (“IQ”). The companies intend to seek approval of a SISP and a stalking horse agreement with Orion and IQ on the comeback hearing. Deloitte was appointed monitor. Counsel is Lavery for the companies, Norton Rose for IQ and Faskens for the monitor.
Éclairage Contraste M.L Inc., a Lévis, Québec-based lighting manufacturer, filed an NOI on December 17, listing over $8 million in liabilities, including approximately $1.8 million to BDC Capital and approximately $1.5 million to National Bank. The COVID-19 pandemic and its impact on supply chains and production costs, coupled with the negative impacts of a cyberattack suffered earlier this year, created significant pressure on the company's cash flow and finance. The company and the proposal trustee have commenced a solicitation process to identify a strategic partner to allow for the continuity of operations and the maximization of value for creditors. A few investors and buyers have shown interest and discussions are ongoing. MNP is the proposal trustee. McCarthy Tétrault is counsel for the company.