Mastermind GP and Mastermind LP, CCAA

Mastermind GP and Mastermind LP (“Mastermind Toys”), the largest independent specialty toy and children’s book retailer in Canada, obtained CCAA protection on November 23, 2023, listing approximately $62.1 million in liabilities. The company has approximately 800 employees across its head office, distribution centre and 66 physical stores in Ontario, Alberta, British Columbia, Saskatchewan, New Brunswick, Nova Scotia, Manitoba and Newfoundland. It also sells toys and children’s books through an e-commerce platform. Over the past several years, Mastermind Toys has faced a range of challenges including increasing competition, disruptions from the COVID-19 pandemic, and more recently a deteriorating macro-economic environment. Prior to commencing the CCAA proceeding, Mastermind Toys ran an out-of-court sale process that ultimately resulted in a proposed transaction pursuant to which a strategic bidder would acquire Mastermind Toys on a going concern basis. The proposed transaction was subject to mandatory pre-merger notification under the Competition Act. After a lengthy review process, the Competition Bureau issued a Supplemental Information Request (“SIR”) which would necessitate a further, lengthy diligence process. In light of the cost and length of time required to respond to the SIR, and due to Mastermind Toys’ liquidity situation, the company was forced to commence these CCAA proceedings. Mastermind Toys intends to seek the Court’s authorization to commence a store closure process for an initial group of stores, while it explores a potential going concern sale for the remainder of the company’s stores. A&M was appointed monitor. Counsel is Davies for Mastermind Toys, Bennett Jones for the monitor, and Norton Rose for CIBC (the senior secured lender).

By: Dina Milivojevic