The Second Cup Coffee Company Inc., a coffee shop franchisor which owns or controls the “Second Cup Café” brand and rights globally, obtained CCAA protection on May 22 on application by its majority creditor Arbat Capital Group Ltd.
The company franchises these rights to franchisees in approximately 20 countries worldwide, including in Pakistan, Egypt, Azerbaijan, Cyprus, and across sub-Saharan Africa. These franchisees operate approximately 170 cafes worldwide, none of which are located in Canada. The company is not affiliated with and is independent from Second Cup Coffee Co., the Canadian coffee chain and retailer.
The majority shareholders and directors of the company, who are also the majority creditors, became concerned that without a restructuring, the company would be unable to repay the majority creditors’ loans, which became due, along with additional outstanding source deductions and payroll obligations. Creditors are owed approximately $8.9 million.
The purpose of the CCAA proceedings is to stabilize operations, entertain discussions with stakeholders, obtain DIP financing, explore restructuring options and pursue a SISP. Arbat is providing a DIP loan.
Grant Thornton is the monitor. Maxim Lojevsky, the current chairman of the company’s board, is the CRO.
Counsel is Miller Thomson for Arbat, Cassels for the monitor, Drudi Alexiou Kuchar for the company, Necpal Litigation for Demetrios (Jim) Ragas and Chaitons for BMO.
