MedXL Inc. et al., CCAA

MedXL Inc. et al., a Pointe-Claire, Québec-based manufacturer of medical devices and pre-filled syringes, obtained CCAA protection on July 26 listing liabilities of over $56 million, including approximately $20 million to Private Debt Partners Senior Opportunities Fund LP.

The companies have approximately 160 employees. Their clients are in the biomedical and pharmaceutical industries, as well as hospitals principally in North America.

In 2021, a significant product recall on syringes produced by one of the companies placed the group in a precarious financial situation and severely impacted its profitability.

Following the recall, the companies invested in the development of a new product, Praxiject, which obtained approval from Health Canada, CE certification in the EU and approval from the US Food & Drug Administration. However, by this time, the companies were already facing significant cash flow issues and did not have sufficient liquidity to fund raw material purchases required to launch operations on the particular production line for this product.

A large proportion of the companies’ suppliers also recently required payment for products at the time of order, putting additional stress on cash flow.

All of this led to a liquidity crisis such that the companies were unable to pay employees on the week of June 24.

A two-week planned shutdown was implemented during which management identified a small group of staff who would return to work to ship out some of the companies’ inventory and collect accounts receivable. All other employees have been laid off.

The purpose of the CCAA proceedings is to implement an operational restructuring, conduct a SISP and potentially submit a plan.

FTI is the monitor. Raymond Chabot is the information officer.

Counsel is Fasken for MedXL, Stikeman Elliott for the monitor, McCarthy Tétrault for the DIP lender and Private Debt Partners Senior Opportunities Fund LP and Mitsubishi HC Capital Canada, Inc., Miller Thomson for eCapital Commercial Finance, Gowling WLG for IQ, Brunet Greiss for Journey Capital, and Lavery for Briva Finance.