San Industries Ltd. et al., CCAA

San Industries Ltd. et al. (the “San Group”), a group of British Columbia-based lumber companies, obtained CCAA protection on November 29.

The San Group was founded in 1979 and operates a multi-faceted forest products enterprise involving harvesting timber within British Columbia, transporting the timber to a sawmill in Port Alberni for primary processing, transferring the processed lumber to re-manufacturing facilities to create lumber products, and selling those products to end users.

The San Group currently has approximately 250 employees.

Historically, the San Group has run its operations profitably, but says it began facing significant liquidity challenges in 2023 due to external factors including an erosion in the lumber markets, inflationary pressures which increased labour and other input costs, and rapidly escalating interest rates. Compounding these issues was the closure of BC Highway 4 — the only highway that connects the island’s two coasts — over summer 2023 due to a wildfire on Vancouver Island.

The San Group attempted to negotiate a restructuring with its primary lenders, BDC and RBC (formerly HSBC), but was ultimately unsuccessful. BDC is currently owed over $43 million, while RBC is owed over $105 million.

The purpose of the CCAA proceedings is to implement a monitor-run SISP, as the current ownership and management intend to participate as a bidder.

Deloitte is the monitor.

KPMG is the financial advisor to the San Group.

Counsel is Farris for the San Group, Fasken for RBC, Blakes for the monitor and BLG for BDC.