Freshstone Brands gets CCAA protection after prepared meals business hit by cost inflation, lower volumes

Freshstone Brands Inc., a Canadian prepared meals manufacturer with operations concentrated in Ontario, obtained Companies’ Creditors Arrangement Act protection on June 9, 2026.

Freshstone manufactures private-label and branded ready-to-go meals, meal kits, salads, entrees and sides for supermarkets, club stores, convenience stores, foodservice customers and co-manufacturing customers in Canada and the United States. Its operating units and brands include Freshstone Brands, Tiffany Gate, Johnston’s, Keybrand, Dip-A-Chip and Kingsway. As of May 11, 2026, the company had 338 non-unionized employees, supplemented from time to time by approximately 20 to 40 temporary agency workers.

The company operates from leased facilities in Etobicoke, Mississauga, and Kitchener, Ontario, Charlottetown, PEI, and Delisle, Saskatchewan. It intends to continue operations from its Etobicoke and Mississauga facilities, while closing the Kitchener and PEI facilities and having already ceased operations at the Delisle facility. The company says the Kitchener landlord issued lease termination notices on June 5, 2026, and the PEI landlord issued a notice of distress on June 7, 2026, in connection with rent arrears. Freshstone also expects to terminate employees at the Kitchener, PEI and Delisle locations.

The CCAA filing followed margin compression caused by persistent inflation in raw materials, labour and supply-chain logistics, combined with reduced consumer demand and more price-sensitive purchasing. The company had already sold its Kitchen Partners division on May 8, 2026, following a market process run with Origin Merchant Partners. That process contacted 173 parties, circulated a confidential information memorandum to 68 NDA parties and generated seven non-binding LOIs. The sale proceeds allowed Freshstone to repay its obligations under its former CIBC credit agreement, other than continuing letter of credit obligations, but did not restore financial stability.

Freshstone’s remaining liquidity pressure was acute. As at April 25, 2026, before full reconciliation following the Kitchen Partners sale, the company had assets with a book value of approximately $81.8 million and liabilities of approximately $80.4 million. After the Kitchen Partners transaction, the book value of assets was estimated at approximately $60 million and liabilities at approximately $50 million. As of May 26, 2026, Freshstone owed suppliers and other unsecured creditors approximately $29.7 million, and suppliers had begun tightening terms, including requiring payment on delivery, prepayment or reductions in outstanding balances before further deliveries. Freshstone said it could not meet obligations as they became due.

The company’s secured debt includes promissory notes held by Frank Burdzy, Freshstone’s CEO, board member and noteholder. Burdzy advanced secured loans beginning in July 2025, including $1.15 million, $2 million, a further $2 million and $2.75 million, with total amounts owing under the notes of approximately $10.1 million as of June 5, 2026. The obligations are secured by a general security agreement over substantially all present and after-acquired personal property, subject to excluded assets. CIBC also holds cash collateral of approximately $0.51 million supporting letters of credit issued in favour of Food Processors Affiliation Canada Inc. and Granite Property Nominee Inc.

The restructuring plan is to preserve operations while Freshstone rationalizes its footprint, moves selected assets from redundant facilities to Etobicoke or Mississauga, realizes on remaining redundant assets by auction, liquidation or other means, and seeks approval of a SISP. Burdzy intends to submit a stalking horse bid, either personally or through a designated company, to set a floor price and preserve a going-concern path if no superior bid emerges. The company’s proposed SISP milestones contemplate non-binding LOIs by August 14, 2026, binding bids by September 29, 2026, and closing of a successful bid by October 16, 2026. Garrington Financial Services Inc. is providing a DIP facility.

Deloitte is the monitor. GlassRatner is the proposed sale advisor. Counsel is Stikeman Elliott for Freshstone, Osler for the monitor, DLA Piper for Garrington, and Chaitons for Burdzy.