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RECENT FILINGS
- Imperial Tobacco, a Montreal, Quebec-based cigarette company that manufactures tobacco products for brands such as Marlboro and Pall Mall, filed for protection under the CCAA on March 12. The company leads the tobacco industry with roughly 48% market share of all legal sales in 2018. The two other major Canadian manufacturers and distributors of tobacco products are Rothmans Benson & Hedges and JTI-Macdonald, the latter of which was granted court protection under the CCAA on March 8. The company is currently facing an existential threat from litigation across Canada, including multiple class actions and government claims seeking to recover health care costs (collectively, the "Tobacco Litigation"). Earlier this month, the Quebec Court of Appeal upheld a 2015 ruling in a lower court that found the tobacco companies concealed the health risks of smoking from the public. The plaintiffs in the Tobacco Litigation are seeking hundreds of billions of dollars in damages, which significantly exceed the company's total assets. FTI Consulting was appointed monitor. Counsel is Osler for the company and Davies for the monitor.
- Hutchens et al., a group of individuals who allegedly orchestrated a fraudulent loan scheme, was placed in interim receivership on February 28 on application by Gary Stevens, Linda Stevens and 1174365 Alberta ("117 Alberta") (collectively, the "Applicants"). Gary and Linda, residents of Alberta, are the sole shareholders of 117 Alberta. The Applicants sought a receivership order to protect their ability to enforce two final judgments against Tanya Hutchens and Sandy Hutchens from a US federal court in Pennsylvania. The Applicants were defrauded by the Respondents in a fraudulent scheme disguised as a financing enterprise for real estate transactions. In October 2014, the Applicants sought refinancing for mortgage loans on property they were developing in Saskatchewan. They were referred to Westmoreland Equity Fund, which required the Applicants to pay large advance fees for the financing they sought. Over the following months, Westmoreland reneged on its promises to provide financing, changing the amount it said it would loan from $13.9MM (CAD) to $7.5MM (CAD), on conditions Westmoreland knew the Applicants could not meet. The Applicants realized that Westmoreland was the front for a fraudulent scheme orchestrated by the Hutchenses. Westmoreland would first issue loan commitments that it could neither fund nor intended to. Then, it would create a pretext to find fault with the borrowers' loan applications, which it used to justify imposing further monetary conditions. Finally, Westmoreland would assert its victims had not satisfied these new conditions in order to terminate the loan application process, after which Westmoreland would keep all the monies advanced. The Applicants brought a claim against Westmoreland and the Hutchenses in the Pennsylvania State Court because the company was registered as operating in Pennsylvania. Farber was appointed interim receiver. Counsel is Necpal Litigation for the Applicants and Naymark Law for the interim receiver.
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Sponsored by Bentham IMF
Click HERE for recent articles and a podcast on litigation funding for insolvency matters.
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- York Rio Resources and Brilliante Brasilcan Resources, two Ontario-based corporations, had all of its funds placed in receivership on March 6 on application by the OSC. These funds, which are worth approximately $5.2MM, were recovered by the OSC relating to investment schemes by the two companies. Between May 2004 and October 2008, various companies were found to have violated the Ontario Securities Act in raising about $180.0MM from investors. Other than two respondents who entered into approved settlement agreements, the OSC concluded that the remaining companies had violated the Act by, amongst other things, (1) trading in securities without registration and filing a prospectus; and (2) engaging in a course of conduct they knew or ought to have known would perpetrate a fraud on investors. In a sanctions decision released in 2014, an OSC panel ordered that the companies fully disgorge certain amounts, some on a joint and several basis with York Rio and Brilliante. The OSC now wishes to proportionally distribute the proceeds to investors in York Rio and Brilliante securities. Farber was appointed receiver. Counsel is Gowling WLG for the OSC.
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Distinct Infrastructure Group (TSX:DUG), a Toronto, Ontario-based infrastructure provider for Canadian utilities, municipal and provincial governments, was placed in receivership on March 11 on application by RBC, owed approximately $53.4MM. The company's major customers include Rogers, Bell, Manitoba Hydro and the Manitoba Water Services Board. RBC recently became aware that the company had significantly misstated its borrowing base calculations and accounts receivable in its reporting to RBC. This resulted in the company obtaining advances under an operating line of credit of at least $30.0MM more than was otherwise permitted under credit facilities available to the company. In December 2018, the company informed RBC that it and one of its subsidiaries, iVac West, wished to place certain of their equipment for sale with Richie Bros. Auctioneers. RBC agreed that the company would initially apply $2.0MM from the proceeds of the auction against the obligations owed to RBC. In January 2019, the company applied for an order directing Richie Bros. to distribute the sale proceeds to RBC. This application was stayed upon the granting of the receivership order. The appointment of a receiver was necessary as the company is currently experiencing a severely stressed liquidity position and does not have sufficient cash to support its ongoing operations. Deloitte was appointed receiver. Counsel is TGF for RBC, Stikeman Elliott for a special committee of the company and Aird & Berlis for the receiver.
- Skyventure Whitby, the operator of an iFLY indoor skydiving facility in Whitby, Ontario, filed an NOI on March 6, listing 10.7MM in liabilities, including $6.9MM to National Bank and $1.5MM to FTQ. Grant Thornton is the proposal trustee.
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Sponsored by Accord Financial
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DOCUMENT LIBRARY UPDATES
- Have you subscribed to our new Document Library service yet? If not, you've missed out on last Thursday's subscribers-only email where we discussed:
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that caution should be exercised with liquidation process orders in light of a recent oversight in drafting an order that may put a liquidator out about $2 million; and
- a monitor's concern about a CCAA debtor that has not been acting in good faith.
- Make sure your group is subscribed so you're aware of all the important case updates and legal issues developing.
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Check out our website for further details on the Document Library, including pricing. When you're ready, send us an email to get your group subscribed!
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ASSETS FOR SALE
- Grant Thornton Limited, in its capacity as court-appointed receiver, is soliciting offers for the purchase of the assets and operations of 1793082 Ontario Ltd. o/a K.D. Quality Pellets. The principal assets consist of land, buildings, and equipment compromising the wood pellet production facility that K.D. Quality Pellets operated in New Liskeard, Ontario. The deadline for submission of bids to purchase the assets is 12:00 p.m. (EST) on April 17, 2019. For additional information, please contact Jason Kanji by email at Jason.Kanji@ca.gt.com or by phone at 416-777-6136.
- Albert Gelman Inc., in its capacity as proposal trustee of Synergy Stamping Inc. and 1696306 Ontario Inc. (the “Companies”), is soliciting offers for the purchase of the business and assets of the Companies. The Companies fabricate, design and manufacture metal components used in commercial and industrial lighting (e.g. louvers, slats and metal housings). The Companies supply products to original equipment manufacturers and the after-market, largely in the commercial and industrial construction industry. The Companies operate from a 22,000 square foot leased manufacturing facility located in Mississauga, Ontario. Interested parties may obtain a confidential information package by contacting Albert Gelman Inc. and executing a non-disclosure and confidentially agreement. Offers must be submitted to Albert Gelman Inc. located at 100 Simcoe Street, Suite 125, Toronto, Ontario by April 9, 2019 at 5:00 p.m. (Toronto time). For more information or to request an information package please contact Tom McElroy at 416-504-1650 ext. 117 or by email at tmcelroy@albertgelman.com.
- BDO, in its capacity as receiver of Sports Villas Resort and Twin Rivers Golf, collectively carrying on business as Terra Nova Resort, is seeking offers for the receiver's interest in certain assets of the companies on an "as is, where is" basis. The deadline for the submission of binding offers is 12:00 p.m. (ADT) on April 8, 2019. Further details can be found HERE.
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EY, in its capacity as court-appointed receiver, is requesting proposals for the purchase of the assets of the Canadian entities of the Kodiak Group of Companies. The deadline for submission of proposals for the purchase of the assets is 4:00 p.m. (MT) on March 28, 2019. Interested parties may download a copy of the information package and the Request for Proposals at www.ey.com/ca/kodiak or by contacting Trina Sorbara at 780-412-2393.
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Powell Associates Ltd. (ICIN), in its capacity as receiver of PCB Holdings Ltd., formerly operating as the Three Mile Entertainment Complex, is selling by tender a multi-purpose entertainment facility with restaurant, kitchens, bars, taverns and lounges located in Saint John, New Brunswick. Tender bids must be received no later than 1:00 p.m. on March 22, 2019. To obtain more information, please contact Paul Moffett or click HERE.
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Powell Associates Ltd. (ICIN), in its capacity as receiver of Richibucto Furniture 2012 Ltd. / Meubles Richibucto 2012 Ltée., is selling by tender a former retail furniture store located in Richibucto, New Brunswick. Tender bids must be received by no later than 1:00 p.m. on March 20, 2019. To obtain more information, please contact Paul Moffett or click HERE.
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BDO, in its capacity as court-appointed receiver, is soliciting offers to purchase the operations and assets of Mike Weir Wine Inc. The principal assets consist of the owned land and buildings comprising the winery and certain wine making equipment located in Beamsville, Ontario. Further details can be found HERE.
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PwC, in its capacity as receiver of 1905393 Alberta Ltd. pursuant to an order granted by the Court of Queen’s Bench of Alberta, has retained Colliers International to solicit offers to purchase the property described as 11702 99 Avenue, Grande Prairie, Alberta, consisting of one operating hotel and one new hotel in a state of substantial completion. Offering a total of 232 rooms, these two hotels provide the local market with top-tier accommodations offering full services, underground parking, banquet space, fitness and spa amenities, and convenient airport, hospital, and highway access. Further details can be found HERE.
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Need to promote a distressed asset sale? Email us!
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Sponsored by Maynards
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INSOLVENCY STORIES IN THE NEWS
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Sponsored by A.D. Hennick & Associates Inc.
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UPCOMING EVENTS
- ACG Toronto will be hosting a Spring Social at The Shore Club in Toronto on March 26. Further details can be found HERE.
- TMA Toronto NextGen will be hosting an Indoor Bocce Ball Event at Lob on April 4. Further details can be found HERE.
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The 14th Annual Insolvency Hockey Game will be held in Toronto on April 8. Anyone in the industry is invited to play. To RSVP, contact Jordan Rumanek at jordan@rumanek.com.
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TMA Toronto will be hosting an event entitled "Perspectives on Work/Life Balance in the Turnaround Profession" on March 28. Further details can be found HERE.
- ACG BC will be hosting a Middle Market Growth Conference from April 8-9. Further details can be found HERE.
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OBA will be hosting a 4-part event entitled "Insight from Murray Klein Award Winners" on April 8 (Part 4). Speakers will discuss precedent-setting cases in which they were involved, as well as new concepts and practices in Canadian insolvency and restructuring law. Further details can be found HERE.
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Click HERE to learn more about our Special Situation Finance Group
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FROM THE EDITOR
Our goal is to keep you current on everything that is happening in our market in one easy-to-read email per week.
- Insolvency Insider's Monday email is proudly written by Janice To. Henry Louis is the editor of the Insolvency Insider publications.
- Catch up on any emails you missed by visiting our archives!
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Have a great week!
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