We use cookies to give you the best online experience. By using our website you agree to our use of cookies in accordance with our cookie policy. Learn more here.Close Me
Arctic Glacier Income Fund (CSNX:AG.UN) (the "Fund")
has obtained creditor protection from the Manitoba Court of
Queen's Bench to allow its subsidiaries to continue normal
operations as the Fund seeks new investors.
The Arctic Glacier Income Fund is an unincorporated, open-end
mutual fund trust. The Fund's head office is located in
Winnipeg, Manitoba. Arctic Glacier's operating subsidiaries
manufacture and distribute packaged ice products in Canada and
United States.
They operate 39 production plants and 47 distribution facilities
across six provinces in Canada and 23 states in the US, serving
more than 75,000 retail locations. Most of the company's sales
are to resellers such as supermarkets, mass merchants, convenience
stores and gasoline outlets.
The court was told that the principal secured debt of the
business consists of first lien debt of about C$7 million and US$23
million. Second lien debt of about C$58 million and US$152 million
in non-revolving term loans is also outstanding.
In an affidavit supporting the Fund's application under the
Companies' Creditors Arrangement Act (CCAA), Keith
McMahon, president and CEO, said that Arctic Glacier was insolvent
because it was unable to meet an accelerated payment demand from
secured creditors who are owed an amount exceeding C$235
million.
Despite defaulting on its debt, McMahon said the company is
viable, profitable in its operations, and generating strong cash
flow. He said Arctic Glacier continues to be a leading North
American manufacturer and distributor of packaged ice. McMahon told
the court that the business holds the leading market position in
Canada and in most of the markets it serves in the United
States.
In 2010, Arctic Glacier had sales of C$233.5 million and
operating profits of C$48.9 million. The business continues to
generate operating profits and in the past has been able to make
significant cash distributions to its unitholders, the court was
told.
Since 2008 the business has been subjected to expensive
antitrust litigation, poor weather conditions and increased
financing costs. The effect of reduced sales volumes from
unseasonably cool and wet spring weather in 2011 reduced demand for
its products during a period when the business's marketing,
debt servicing and litigation costs were rising.
The court order authorizes the Fund and its operating
subsidiaries to begin a court-supervised recapitalization of the
business through a sale and investment solicitation process. Arctic
Glacier's current lenders have agreed to provide up to $50
million debtor-in-possession financing to fund its operations
during the CCAA process.
In a news release, the Fund said it expects to maintain normal
operations in both Canada and United States without layoffs or
lease terminations. It said that suppliers of goods and services
will be paid as usual, including for amounts owed prior to the CCAA
filing.
Alvarez and Marsal Canada has been appointed monitor of the CCAA
proceedings. TD Securities has been retained to conduct the sale
and investor solicitation process which has been approved by the
lenders.
The monitor has made an application to the United States
Bankruptcy Court in Delaware for recognition of the CCAA
proceedings under Chapter 15 of the US Bankruptcy Code in
order to secure creditor protection in the United States.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
On February 1, 2013, the Supreme Court overturned a controversial decision of the Ontario Court of Appeal which granted pension beneficiaries priority over DIP lenders in the context of a restructuring under the Companies’ Creditors Arrangement Act ("CCAA").
Domenico Magisano, Commercial Litigation Partner at Lerners LLP, discusses generally what happens when a company is insolvent and how restructuring tools can be used to help companies emerge from insolvency stronger.
Parties may need to proceed cautiously in enforcing contractual rights and remedies in circumstances where there is a risk of the counterparty subsequently becoming insolvent.
Swaps market participants accepting cash collateral from an entity subject to Ontario provincial pension benefits legislation will want to consider the implications of this decision on their priority.
A summary of a number of rulings made by the Supreme Court of Canada, which are of significance for lenders, employers and pension plan administrators of Ontario-registered defined benefit pension plans.
The Supreme Court of Canada’s decision in Sun Indalex Finance, LLC v United Steelworkers, 2013 SCC 6, has a number of implications for employers, pension plan administrators, as well as both secured and unsecured creditors.
