Demers greenhouse group seeks breathing room under NOI as lender backs $3.5 million interim financing and fast-tracked sale process

Les Productions Horticoles Demers Inc., Les Serres Demers Inc., Les Serres Olivier Inc., 9718656 Canada Inc., and Immeubles PHD S.E.C. each filed notices of intention to make a proposal under the Bankruptcy and Insolvency Act between January 8 and 12, 2026, with PricewaterhouseCoopers Inc. appointed as proposal trustee. The debtors obtained court approval for interim financing, priority charges, a key employee retention plan, limited payments to critical suppliers, and a court-supervised investment and sale process.

The Demers group is a third-generation, family-owned agricultural business that entered greenhouse production in 1970 and expanded significantly under brothers Jacques and Réjean Demers beginning in 1990. The group operates large-scale greenhouse and field production facilities in Lévis, Saint-Nicolas, and Drummondville, specializing in tomatoes and small fruits including strawberries, raspberries, and blackberries.

As at the NOI filings, the business employed approximately 250 people, rising to about 350 during peak season, with between 210 and 310 temporary foreign workers housed through affiliated real estate entities. The consolidated asset base includes three major greenhouse complexes totaling more than 27 hectares and representing historical investments exceeding $110 million.

According to the trustee, the group’s insolvency stems from a combination of structural leverage and recent operational shocks. Demers accumulated significant secured and unsecured debt during expansion years, with financing costs that outpaced cash flow, particularly following pandemic-era emergency borrowings.

Operationally, the business faced crop disease issues, including tomato rugose virus, which reduced yields and quality. These challenges coincided with falling produce prices over the past year, driven in part by increased imports and dumping into the Canadian market. Adverse weather conditions in late 2025 further reduced greenhouse productivity while increasing energy costs. By early January 2026, the group had exhausted liquidity and could no longer meet obligations as they came due.

On a consolidated basis, Demers reported total assets of approximately $97.2 million as at November 30, 2025, against total liabilities of about $119.6 million, resulting in negative equity of roughly $22.4 million. Secured debt totaled about $77.9 million, led by Desjardins, Investissement Québec, and Farm Credit Canada, with unsecured loans of about $9.0 million and trade payables to roughly 300 suppliers.

The business generated approximately $36.8 million in revenue over the first 10 months of fiscal 2025 but recorded a net loss of about $7.4 million, reflecting compressed margins and elevated financing costs.

The debtors’ restructuring strategy centres on maintaining operations while pursuing a court-approved solicitation of investment and sale process. Desjardins, the senior secured lender, has agreed to provide up to $3.5 million in interim financing, secured by a super-priority charge of $4.2 million ranking behind a $250,000 administrative charge. A sale process has also been approved, with PwC Corporate Finance Inc. acting as the sale advisor. The sale timeline contemplates non-binding bids by February 20, 2026, final offers by March 30, 2026, and closing by May 22, 2026.

The debtors also obtained approval of a $430,000 key employee retention plan covering 28 employees critical to greenhouse operations and the sale process, along with authority to pay approximately $485,719 to essential suppliers to avoid operational disruption.

Counsel is Stein Monast for the companies.