Kroeger Inc., NOI

Kroeger Inc., a Toronto-based wholesale distributor of toys, games, costumes, and similar goods, filed an NOI on February 28, listing approximately $7.3 million in liabilities, including approximately $1.1 million to primary secured lender Pathward, National Association.

The filing was precipitated by the alleged misappropriation of about $1.5 million in company funds by its former CFO. The company has commenced a lawsuit against the former CFO, among others, to recoup the funds. Unfortunately, it now faces an imminent liquidity crisis, with virtually no cash, limited availability to borrow under its existing credit facilities, and no ability to pay key inventory suppliers, sales representatives, or its landlord. The company has received a notice of default from Pathward, and its landlord and certain suppliers have demanded payment and started taking enforcement steps.

The purpose of the NOI proceedings is to pursue a SISP with 1001166783 Ontario Ltd. (which is also the DIP lender) acting as stalking horse bidder.

B. Riley Farber is the proposal trustee.

Counsel is Fasken for the company, Pallett Valo for the proposal trustee, TGF for the DIP lender and Chaitons for Pathward.