8942595 Canada Inc. (operating as Herbal Magic Inc. effective August 1, 2014)


In Bankruptcy

Page last updated: March 21, 2017

This page is for information purposes only and you should consult your professional adviser if you have any questions or are uncertain as to your rights or obligations.

On August 7, 2015, 8942595 Canada Inc.(“8942595” or the “Company”) made an assignment into bankruptcy for the general benefit of creditors pursuant to the provisions of the Bankruptcy and Insolvency Act (“BIA”) and PricewaterhouseCoopers Inc. (“PwC”) was named trustee in bankruptcy (“Trustee”).

The first meeting of creditors will be held on August 26, 2015 at 10:00 a.m. (the “Meeting of Creditors”) at the Holiday Inn Toronto Downtown Centre, the Rosedale Room, 30 Carlton Street, Toronto, Ontario.

On August 10, 2015 notice of the Meeting of Creditors and a proof of claim form and other materials relating to the bankruptcy of the Company was sent to all known creditors of the Company. Below is some additional information for former customers of the Company.

Customers

On August 7, 2015, 9302751 Canada Inc.(“9302751”), a secured creditor to 8942595 (“New Herbal Magic”), acquired 41 of the Company’s centres by way of foreclosure. These stores will carry on business under the Herbal Magic banner.

Upon filing an assignment in bankruptcy, the Company closed or abandoned certain store locations, a list of which is referenced below. The Trustee will not be occupying or reopening any of those stores.

If you are a customer of a closed or abandoned store and have not received all inventory or services already paid for, you will have a claim in the Company’s bankruptcy proceedings for amounts owed to you by the Company. A proof of claim form has been mailed to you and can also be access from this website.

You can also contact New Herbal Magic to discuss if alternate arrangements can be made to provide you services and/or products from the stores that remain open. The number to call is 1 800 852 5401.

If you are a customer of a store that has been closed and were making monthly payments to the Company by automatic withdrawal from your bank account, the automatic withdrawal will be cancelled with immediate effect. You may also take a copy of the Notice of Bankruptcy (posted below) with you to your financial institution to assist them to stop the withdrawals if you wish to confirm cancellation of the preauthorized payments.



Status update as of March 21, 2017

On February 17, 2017, the Trustee issued a final dividend of approximately one cent on the dollar to creditors (excluding former employees) with proven claims, subject to the levy payable to the OSB.

On March 14, 2017, upon receipt of the response from Employment Services Development Canada (“ESDC”), the Trustee issued a final dividend of approximately one cent on the dollar to former employees with proven claims, subject to the levy payable to the Office of the Superintendent of Bankruptcy (“OSB”), Employment Insurance (“EI”) overpayment deductions, and amounts owed to Service Canada under the Wage Earner Protection Program Act (“WEPPA”), where applicable and as instructed by ESDC. For any questions regarding EI overpayment deductions or WEPPA deductions, employees should contact ESDC and/or Service Canada directly.

Status update as of April 6, 2016

It is anticipated that a very minimal dividend (of less than 5 %) is expected to be declared and will be distributed amongst creditors of 8942595 who have proven a claim against the estate of 8942595.

TAKE notice that as a dividend is intended to be declared, if you are a creditor and do not prove your claim by May 10, 2016, the Trustee will proceed to declare a final dividend without regard to claims that have not been filed. Therefore, all creditors are advised to file a proof of claim with the Trustee at their earliest convenience, if they have not already done so.

As previously reported by the Trustee in its Preliminary Report to Creditors (“Preliminary Report”) and at the first meeting of creditors, prior to 8942595’s bankruptcy, 9302751, a secured creditor of 8942595, foreclosed on all of the assets of 8942595 pursuant to its security agreements with 8942595 (the “Foreclosure”).

Following its appointment the Trustee engaged independent legal counsel to conduct a review and provide an opinion on the security held by 9302751, and subject to the standard assumptions and qualifications, the security was found to be valid and enforceable against the assets of 8942595.

Subsequent to the date of bankruptcy, the Trustee reviewed the Company’s available books and records with respect to the value of the assets subject to the Foreclosure.

Following its review, the Trustee determined that it was likely that the market value of assets subject to the Foreclosure, exceeded the amount of the indebtedness secured under the security agreements held by 9302751 (the “Surplus”). Accordingly, the Trustee entered into negotiations with 9302751 to recover a payment to the estate in respect of the Surplus, taking into consideration the estimated liquidation value of the assets in a bankruptcy scenario, and an assessment of the value of the assets had the assets been offered in an orderly sale process.

This matter was resolved pursuant to a settlement and mutual release agreement dated November 2, 2015 (“Settlement Agreement”) between the Trustee and 9302571, pursuant to which $300,000 (“Settlement Amount”) became available to the estate from the assets subject to the Foreclosure. Pursuant to the provisions of the BIA, the Settlement Agreement was approved by the Inspector of 8942595.

As reported in its Preliminary Report, 9302571 provided the Trustee with a deposit (“Third Party Deposit”) to fund the administration costs of the bankruptcy proceeding pursuant to a Third Party Deposit Agreement, in the event that there were insufficient assets in the estate to fund the administration of the bankruptcy proceeding. Following the receipt of the Settlement Amount, the Third Party Deposit was returned to 9302571.

As a result of the Settlement Agreement and the receipt of the Settlement Amount, a minimal dividend is available for distribution among proven creditors of 8942595.

Status update as of November 4, 2015

The Trustee advises that a minimal dividend is intended to be declared and will be distributed amongst creditors of 8942595 who have proven a claim against the estate of 8942595 and, therefore, all creditors are advised to file a proof of claim at their earliest convenience. If a creditor does not prove their claim, the Trustee will proceed to declare a dividend without regard to claims which have not been filed.
 



This Web site will be updated as information becomes available.

For more information, please contact: PwC Hotline, Telephone: +1 844 201 2824, or via Email.
 

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