Current Insolvency Assignments
View a list of current PwC insolvency assignments.
Page last updated: April 11, 2018
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.
More information will be posted to this website, as soon as it becomes available.
We advise that on March 22, 2018, the Capital Financing as contemplated under BuildDirect's Plan, was completed. As a result, funds to effect distribution payments to creditors on account of their pre-filing debt, have been advanced to the Monitor today.
Distribution to Creditors
All creditors who submitted and hold a proven claim can expect to receive their distribution payment promptly. Generally, all creditors noting a Canadian or US mailing address on their Proof of Claim will receive their entitlement by cheque, via first class mail. Cheques will be mailed by the Monitor no later than Wednesday, March 28, 2018. Please allow for a reasonable amount of time for delivery. Creditors noting a mailing address outside of Canada and the US on their Proof of Claim will receive their distribution payment from the Monitor by wire transfer. BuildDirect has supplied the Monitor with all wire information, and all wires are expected to be completed by Thursday, March 29, 2018 at the latest.
Status of BuildDirect
BuildDirect has fulfilled and completed all of its duties and tasks as outlined in the Plan, and has exited CCAA creditor protection.
Amendment of Plan
On March 23, 2018, the Plan was amended to allow for earlier distributions to unsecured creditors. As this amendment will not materially prejudice the interests of Affected Creditors, Court approval of the amendments is not required. A copy of the amended Plan, and a redline version can be found under the Meeting of Creditors tab.
We advise that since the last update, on March 15, the US Court sanctioned the CCAA Plan. A copy of the US Court Order can be found under the US Court Orders tab.
The Capital Financing which had been scheduled to close on March 16, is now expected to close on March 22 or 23. Once the Capital Financing closes, funds will be paid to the Monitor, and the Monitor will then be able to proceed with the distribution to creditors. Our expectation is that all payments will be released by the end of March, however, once we have a concrete release date, we will update this website with that information.
Today the Court sanctioned the Plan that was approved by the Affected Creditors at yesterday's Meeting of Creditors. A copy of the Court Order can be found under the Canadian Court Orders tab. The US Court hearing to recognize the Plan, and its approval, is scheduled for Thursday, March 15. Following that, the next step for the Company is to close their Capital Financing, and this is expected to occur on Friday, March 16, or shortly thereafter. We will post another update on this website, with respect to the aforementioned events, and timing on distribution of funds, early next week.
The Meeting of Creditors (the "Meeting") was held this morning at 10:00am to consider and vote on the Company's Plan of Compromise, Arrangement, and Reorganisation (the "Plan").
The Plan contained two classes of creditors, notably the Secured Noteholders and the Unsecured Creditors. In order for the Plan to achieve creditor approval, the vote required more than 50% in number of the voting creditors, representing more than 2/3 in value of each creditor class, to vote in favour of the Plan. Each of the classes voted in favour of the Plan. For full details of the Meeting and voting results, please refer to the Monitor's Sixth Report, which can be found under the tab Monitor's Reports.
The Company has scheduled a court hearing for tomorrow, March 13, 2018, at which time it will seek the Court's sanction of the Plan. In addition and subject to the Court's sanction, the Company will seek recognition in the US Court of the same on Thursday, March 15, 2018.
The Company has proposed further amendments to the Plan as a result of discussions between certain of its Senior Noteholders. The proposed amendments would amend the definition of ‘Unaffected Claim’ to include C$150,000 of the amount owing under a senior secured note held by Kelly Booth. Deans Knight has agreed to reduce the amount of its Unaffected Claim by C$150,000, so the total amount of Unaffected Claims under the Plan will remain the same and Affected Creditor recoveries will not be impacted. As part of the implementation of the Plan, Deans Knight and Ms. Booth are expected to enter into a new note purchase agreement with the Company, which provides for a 3% premium payment by the Company upon the maturity of the note.
The proposed amendments to the Plan are subject to BuildDirect obtaining approval from the Lead Investors. A copy of the Plan with the proposed amendments has been posted in the Creditor Meeting section of this website.
The Company continues to work on finalizing the Capital Financing component of its Plan. The Interim Lenders and one of the Company's key investors, MDV IX, LP have agreed to be the Lead Investors in the Capital Financing. As part of that agreement, some modifications were made to the Plan that will interest investors who intend to provide new funding as part of the Capital Financing and the Company's current Noteholders who will become shareholders of the Company. The changes are reflected in the first and second articles of reorganization and the shareholders agreements. Each of these documents were Schedules to the Plan. Amended first and second articles of reorganization and the amended shareholder agreement are posted on this website in the Creditor Meeting section along with comparisons to the original documents. In addition, a letter from the Company to each Noteholder that summarizes these changes has also been posted in the Creditor Meeting section of this website. The key changes are as follows:
Questions regarding these changes should be addressed to Myles Hiscock of Canaccord Genuity at firstname.lastname@example.org.
Creditors are also reminded that if they wish to vote on the Company's Plan but do not intend to attend the creditor meeting, they must submit a completed proxy to the Monitor by 5pm Vancouver time on Friday, March 9, 2018. Further, if Unsecured Creditors wish to elect to be a Convenience Creditor, these elections must also be submitted to the Monitor by 5 pm Vancouver time on Friday March 9, 2018.
As a result of the Company's application to Court, the Court approved the following during a hearing today:
The Monitor will be sending information regarding the Meeting to Creditors who have filed a Claim. The information will be sent by email or regular post (if no email has been provided to the Monitor) no later than Monday February 26, 2018. During the Meeting, the Creditors shall have an opportunity to receive an update on the Company's business and restructuring process, as well as participate in a vote on the Plan.
A Creditor with a Proven Claim is entitled to vote on the Plan. Voting can be done in person at the Meeting (where the vote will be conducted by ballot) or by submitting a proxy to the Monitor. Proxies must be sent to the Monitor no later than 5:00 pm (Vancouver time) on Friday, March 9, 2018, or be hand delivered at the Meeting.
As outlined in the Plan, Unsecured Creditors who are not Convenience Creditors, will receive 5 cents for every dollar of their Proven Claim. Unsecured Creditors who have claims less than $2,000 are called Convenience Creditors. Convenience Creditors will receive a 100% recovery on the lessor of their Claim and $2,000. Convenience Creditors are deemed to vote in favour of the Plan and therefore the submission of proxies or attendance at the Meeting is not necessary for those Creditors to lodge their vote. Convenience Creditors are still welcome to attend the Meeting.
An Unsecured Creditor with a Claim exceeding $2,000 may elect to be a Convenience Creditor by completing a Convenience Creditor Election form and submit it to the Monitor no later than 5:00 pm Vancouver time on March 9, 2018. If an election is made, the Unsecured Creditor shall be treated as a Convenience Creditor for distribution purposes and the Unsecured Creditor is deemed to vote in favour of the Plan for the full amount of their Claim. Therefore, an Unsecured Creditor who elects to become a Convenience Creditor need not attend the Meeting or submit a proxy in order to lodge their vote. However, the Unsecured Creditor is welcome to attend the Meeting.
As noted previously, the Plan is dependent upon sufficient funds being raised through the Capital Financing. Noteholders and current shareholders have an opportunity to further invest in the Company. Participation in the Capital Financing improves the treatment of Noteholders and shareholders under the Plan and the Recapitalization. Noteholders and shareholders interested in providing a further investment should review the Company's Information Circular posted on this website and contact Myles Hiscock at Canaccord Genuity (email@example.com) for more information. Noteholders and shareholders who choose to make a further investment must submit a Secured Noteholder Notice of Election or an Existing Security Holder Notice of Election (as applicable) to Myles Hiscock at Canaccord Genuity no later than 5:00 pm (Vancouver time) on Tuesday March 6, 2018.
The Company has filed an application today which shall be heard on Thursday February 22, 2018 to approve the filing of the Company's Plan of Compromise, Arrangement and Reorganization (the "Plan"), and to hold a Meeting of Creditors (the "Meeting") at 10:00 am on Monday, March 12, 2018 to vote on the Plan. The Company is also seeking an extension of the stay of proceedings until March 19, 2018, so that it has sufficient time to implement its Plan.
The application materials filed with the Court today are posted on this website. The materials include the Company's Plan (posted in the Meeting of Creditors tab) and an Information Circular (posted in the Capital Financing tab).
In summary, the Plan consists of the following three components:
The Company is seeking to implement its Plan by March 19, 2018. Successful implementation of the Plan is conditional on:
In general, if the Company's Plan is implemented, it will reduce the Company's funded debt from $58 million to $4 milliion, compromise approximately $15 million in Unsecured Claims and reset its equity capital. Further, the Company's working capital will be improved as a result of the new funding and will facilitate the further development of its technology platform and penetration in the building products market such that the Company can attain profitability.
The Monitor has completed its 5th report to the Court which is also posted on this website. The Monitor's report provides an update on the Company's operations and financial results including its forecasted cash flow. Further, the Monitor has commented on the Company's Plan. In summary, the Monitor has recommended that the Company's Creditors vote in favour of the Plan.
Following the hearing on February 22, 2018, the Monitor will send details regarding the Meeting of Creditors, and how to vote on the Company's Plan, to the Creditors who had submitted a Claim to the Monitor by the February 9, 2018 Claims Bar Date.
The Company is in the process of developing its Plan to be presented to creditors in the CCAA proceedings. The Company has scheduled a court hearing for Thursday February 22, 2018, at which time it will seek approval to file the Plan and present it to its creditors. In addition, the Company will be seeking an extension of the CCAA proceedings to allow time for the Plan to be voted on by the creditors and ultimately implemented. Further information on the Plan and the court application will be posted next week. In the meantime, the Company's financial results have been better than forecasted as presented in the Monitor's second Report dated November 16, 2017.
We advise the Court approved the claims procedure at today's hearing. A copy of the Court's Order, claim forms and instruction letters can be found under the Claims Process tab above.
For all Unsecured Creditors, the Monitor will be sending you a Claims Package of documents, in the first instance by email, or by regular post if we don't have your email address. All email recipients should expect to receive their Claims Package by email no later than Monday, January 22, 2018.
For all Secured Noteholders, which include the Senior, Junior and Convertible Noteholders, the Monitor will be sending you a Claims Package of documents by email. You should expect to receive your Claims Package by email no later than Monday, January 22, 2018.
Please note that for the 2 groups mentioned above, the deadline to submit your claim to the Monitor, is Friday, February 9, 2018. More information is included in the Claims Package.
We advise of a court hearing scheduled for January 18, 2018. As such, the Monitor issued its Fourth Report on January 15, 2018, which can be found under the Monitor's Report tab.
BuildDirect is seeking approval of a claim process that will serve to confirm the Claims against it by Secured Noteholders and Unsecured Creditors. Confirming the Creditors' claims against BuildDirect is a step in the broader CCAA process that is necessary to complete before a Plan of Compromise and Arrangement (a "Plan") can be implemented by the Company. The Company is working on the development of its Plan, and intends to file it with the Court in the near future.
Once the Claims Process Order has been made by the Court, creditors shall receive the appropriate forms and detailed instructions from the Monitor on how to prove their claim. As well, our website will be updated with copies of those instructions and forms.
In light of the decision by the Court on November 24, 2017 with respect to the Alleged License Agreement claim, the Company is seeking a recovery of the costs it incurred to determine the validity of the claim from ICC. The Company, its Interim Lenders and the Monitor have filed materials with the Court that outline the costs incurred by BuildDirect. Copies of these materials and the Monitor's Third report are posted on this website.
On December 6, 2017, the Company sought and obtained a final ruling from the US Court that recognized the Canadian CCAA proceedings. The impact of this order is to confirm the stay of proceedings as ordered by the Canadian Court, is effective in the United States. As a result, creditors of BuildDirect are no longer entitled to take collection action in the United States against BuildDirect for pre-filing debts owed to them. The order of the US Court also restrains parties with executory contracts with BuildDirect from withholding performance or terminating these contracts. A copy of the US Court order will be posted to this website, once the entered copy of the order is obtained from the US Court.
On November 21, 2017, the Court heard arguments on the Monitor’s application seeking a declaration as to whether the Company and In Colour Capital LP (“ICC”) had entered into the Alleged License Agreement. ICC claimed that on or about October 18, 2017, the Company and ICC had entered into the Alleged License Agreement as a result of, among other things, a telephone conversation between the principal of ICC and Mr. Jeff Booth, who was the CEO of the Company at the time. The Company rejected ICC’s claim and asserted that the Alleged License Agreement did not exist. The Monitor was concerned that the existence of this unresolved dispute over the Company’s intellectual property could materially and negatively affect the efforts of the Company to pursue a sale or recapitalization of the business under the SISP. Accordingly, the Monitor filed its application for a declaration on the Alleged License Agreement, so that the issue could be quickly resolved.
On November 24, 2017 the Court gave extensive oral reasons, declaring that the parties had never progressed beyond the negotiation stage, and that consequently the Alleged License Agreement does not exist. The Court further ruled that even if Mr. Booth had purported to enter into the Alleged License Agreement with ICC, any such agreement would have required approval of the Board of Directors of the Company, which was never obtained.
The Monitor is pleased that this issue has been resolved, and that it will no longer distract the Company as they continue with their efforts under the SISP.
A court hearing was held on November 21, 2017 to deal with various matters, which resulted in several updates to this proceeding. The Monitor is pleased with the results of the court hearing as well as the current state of operations and progress within this CCAA administration. For the full details of the Company's operations, please refer to the Monitor's Second Report which can be found under the tab Monitor's Reports.
An Amended and Restated Initial Order ("ARIO") was issued by the Court. An ARIO essentially replaces the Initial Order that was granted on October 31, 2017 at the commencement of the CCAA proceedings. A copy of the ARIO can be found under the Court Orders tab.
The following points have been added to the ARIO, and are highlighted for readers:
The Court also heard the arguments on the application of the Monitor re: the In Colour Capital LP Alleged License Agreement. The Court will provide its decision in this matter on Friday, November 24, 2017.
Apart from yesterday's hearing, we advise that an updated creditor list has been posted under the Creditor Communications tab.
BuildDirect obtained approval from the Court on a number of matters today. The Court approved the proposed sale and investment solicitation process (the "SISP"), the key employee retention plan (the "KERP"), and an agreement with one of its warehouse service providers. Further, the Court approved the deferral of the Company's annual meeting of shareholders until further order of the Court. In light of the approval for the SISP, BuildDirect intends to confirm the engagement of an investment banker shortly, and commence the sales and investment solicitation process immediately thereafter.
On November 21, 2017, BuildDirect will return to Court to obtain an extension of the CCAA proceedings generally. Materials supporting this further court application are expected to be available before the end of the week, and will be posted to this website in due course.
BuildDirect has made significant progress in the short period of time since October 31, 2017 when it commenced these CCAA proceedings. The Company has finalized its interim financing credit agreement and has received US$ 7 million in funding from the US$ 15 million interim financing facility that it negotiated prior to commencing the CCAA proceedings. Further, the Company has secured commitments from each of its warehouse service providers, and most of its significant logistics providers, to continue service so that BuildDirect can continue to service its valued customers.
As part of BuildDirect's recapitalization process, it intends to engage an investment banker and execute a sale and investment solicitation process shortly. To that end, BuildDirect is applying to the Court on Tuesday November 14, 2017 for approval to proceed with this process. Further, BuildDirect has designed a key employee retention plan which it proposes to implement to encourage a number of key employees to continue their employment with BuildDirect. The Company is seeking the Court's approval of this plan on Tuesday November 14, 2017 as well. The Court hearing on Tuesday will also deal with some other incidental matters. The Company's motion materials and the Monitor's report have been posted to this website and provide further details on the matters that will be brought before the Court.
BuildDirect has applied to the United States Court in the Central District of California, Los Angeles Division, (the "US Court") for "recognition" of the Canadian Court's initial order under the CCAA proceedings (the "Initial Order"). Recognition of the Initial Order would effectively extend its effect into the United States. The US Court will hear this application on Wednesday December 6, 2017 at 10:00 am. Application materials are posted on this website under Chapter 15 US Filing Documents.
BuildDirect also sought an interim order from the US Court to recognize certain elements of the Initial Order immediately (the "US Interim Order"). The US Interim Order applies to 22 "Urgent Suppliers" as identified in Exhibit G of John Sotham's affidavit in support of the recognition application which is posted on this website under Chapter 15 US Filing Documents. On November 3, 2017, the US Court granted the US Interim Order which is posted on this website under "US Court Orders". The US Interim Order is effective on October 31, 2017, and applies to the 22 Urgent Suppliers and certain parties to litigation commenced against BuildDirect in the United States (the "Litigants"). In general, the stay of proceedings granted by the Canadian Court now applies to the Litigants and the 22 Urgent Suppliers. Further, the 22 Urgent Suppliers are also restricted from cancelling any contracts/service arrangements that were in place prior to the Initial Order.
On October 31, 2017 (the "Filing Date"), BuildDirect.com Technologies Inc. ("BuildDirect") sought and obtained an Initial Order pursuant to the CCAA. BuildDirect's stated purpose for doing so was to facilitate either a recapitalization or a sale transaction as part of the CCAA proceedings, and to facilitate further financing that BuildDirect required. In order to continue to fund BuildDirects' operations, BuildDirect negotiated a US$ 15 million DIP Term Sheet with a syndicate of lenders who are signficant investors in BuildDirect. The Court approved this Interim Financing which provides for an immediate advance of USD $4 million within 24 hours of approval of the DIP Term Sheet by the Court. BuildDirect's intention is to continue its operations during these CCAA proceedings while it works on its financial restructuring.
As is typical of Initial Orders pursuant to the CCAA, there are restrictions on BuildDirect's trading partners from terminating their arrangements with BuildDirect and on payments that BuildDirect can make with respect to obligations owing to BuildDirect's creditors on the Filing Date. BuildDirect is however, expected to meet its payment obligations for goods and services provided following the Filing Date. The Interim Financing approved by the Court facilitates this.
Details regarding BuildDirect's background and financial position are contained within the initial application materials posted on this website as well as the Initial Order.
The Monitor prepared a pre-filing report to assist the Court during the application made by BuildDirect. This report is posted on this website.
The Monitor will post regular status updates to this website and post future Monitor reports and court materials, as they become available during these CCAA proceedings.
This Web site will be updated as information becomes available.
For more information, please contact: Kiran Chahal or Patricia Marshall, Telephone: +1 604 806 7647, Fax: +1 604 806 7043, or via Email.
View a list of current PwC insolvency assignments.
This page is for information purposes only and you should consult your professional adviser.
This page is for information purposes only and you should consult your professional adviser.
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