Arctic Canadian Diamond, Burgundy obtain CCAA protection amid market collapse

Arctic Canadian Diamond Company Ltd. and Burgundy Diamonds (Canada) Limited, which own and operate the Ekati diamond mine in the Northwest Territories, obtained protection under the Companies’ Creditors Arrangement Act on May 1, 2026, securing a stay of proceedings with the intention of stabilizing operations at the Ekati diamond mine and pursuing a restructuring, including a court-supervised sale and investment solicitation process.

The applicants are part of the Burgundy Group, a publicly-listed Australian diamond producer, with Arctic Canadian Diamond Company serving as the primary operating entity through its 100% ownership of the Ekati Mine The mine, Canada’s first surface and underground diamond operation, has been in continuous operation since 1998 and represents a cornerstone asset in the domestic diamond industry, employing more than 1,000 individuals prior to recent layoffs and generating hundreds of millions in annual regional economic activity.

Burgundy acquired the Ekati Mine in July 2023 for total consideration of approximately US $117 million, following a prior restructuring of Dominion Diamond Mines in 2020 and a 2021 credit bid transaction by second-lien lenders. Since that acquisition, the group has operated the mine as its core asset, with revenues declining from approximately US$442 million in 2024 to US$186.2 million in 2025 as market conditions deteriorated.

The companies attribute their financial distress primarily to a sharp and sustained collapse in global diamond prices, driven by tariffs, reduced Chinese demand, the rise of lab-grown alternatives, and broader macroeconomic pressures. The impact has been severe: average realized prices fell from approximately US $92 per carat at the end of 2024 to as low as US $24 per carat by December 2025, representing a 74% decline. These pricing pressures have coincided with structurally-high operating costs in Canada’s North and significant regulatory obligations, including estimated reclamation liabilities of approximately $427.9 million.

Despite extensive mitigation efforts, including cost reductions, operational optimization, and approximately 150 trade creditor settlements reducing debt by roughly $18 million, the company entered a liquidity crisis. Cash reserves have been depleted, and the business is no longer able to meet payroll, supplier obligations, and secured debt service without protection.

The capital structure is anchored by a $175 million Large Enterprise Tariff Loan facility from Canada Enterprise Emergency Funding Corporation, which carries first-ranking security over all assets and matures December 17, 2032. Additional secured debt includes approximately US$78.3 million owed to second-lien lenders, with interest currently accruing on a payment-in-kind basis. Trade creditors are owed approximately $63 million, while significant surety bond obligations support reclamation liabilities exceeding $197 million in posted bonds alone.

Operational pressures have already resulted in the suspension of the Point Lake open pit in July 2025 and workforce reductions of approximately 120 employees and 20 staff members, alongside a broader contraction in contractor usage. The group reported a net loss of US$86.8 million in 2025, underscoring the severity of the downturn.

Under CCAA protection, the applicants intend to stabilize operations, secure interim financing, and launch a two-phase SISP to maximize value for stakeholders. The process will solicit both asset sale and investment proposals, with management emphasizing that maintaining operations is critical to preserving value given the integrated and remote nature of the mine.

FTI is the monitor. Counsel includes Blakes for the companies, Fasken for the monitor, Torys for Canada Enterprise Emergency Funding Corporation, Osler for Polen Capital Credit et al. and the Government of the Northwest Territories, and BLG for Zurich Insurance Company et al.