National Bank of Canada's role in the CCAA proceedings of Chrono Group

On November 8, 2024, the successful restructuring of the Chrono Group was completed. Chrono Aviation Inc., 9266-4325 Québec Inc., Chrono Jet Inc., 9351-7399 Québec Inc., LUX Air Services Inc., WAAS Avionics Inc. (“Chrono Group”) operated an airline focused on remote regions in northern Québec, owned state-of-the art hangar and terminal at the Metropolitan Airport of Montreal and more than 10 aircraft in its fleet, and employed approximately 330 employees. The Chrono Group was composed of six affiliated entities, each with a different credit structure and shareholders’ composition. In addition to being different for each entity of the group, the credit structure was complex as it varied depending on the categories of assets. There were close to 10 intercreditor agreements in place. 

From the beginning of 2020 until the end of 2024, the Chrono Group proceeded to an informal workout in collaboration with National Bank of Canada, and in consultation with Deloitte as financial advisor to the Chrono Group and RCGT as financial advisor to National Bank. This informal workout contained many phases, including operational and financial restructuring measures, sale of certain assets, sale and leaseback of aircraft, investment in the construction of a state-of-the-art hangar, negotiations of key contracts and issues (including with airport authorities and an Innu organization benefitting from the Chrono Group’s services), reorganization of certain debt facilities and the conducting of three solicitation processes. The informal workout namely allowed to keep afloat and to significantly reduce the debts owed to all secured creditors. 

In October 2024, the Chrono Group obtained an initial order under the CCAA. The CCAA filing was the culmination of the informal workout and its objective was mainly to obtain approval of the Court for a transaction by way of a reverse vesting order and a vesting order pursuant to which Aviation Starlink, a company owned by Pierre-Karl Péladeau, acquired Group Chrono’s business as a going concern.

The transaction was contested by a group of shareholders. After four days of hearing, the proposed transaction was approved by the Court. The transaction closed on November 8, 2024, which allowed for the successful restructuring of the Chrono Group, including its continuation as a going concern, the preservation of almost all jobs and the full repayment of all secured debts, totalling C$37.3 million.

McCarthy Tétrault assisted the National Bank of Canada with a team led by Hugo Babos-Marchand and Jocelyn T. Perreault that included François Dupuis, Ariane Monjauze (Business), Simon Bouthillier (Litigation), Frédérique Drainville and Philippe Bélanger (prior to his appointment as a Québec Superior Court judge in November 2020) (Bankruptcy and Restructuring).