Stornoway files for US$1B renegotiation and CCAA proceedings
November 01, 2019
1.00 Billion USD
On September 8, 2019, Stornoway Diamond Corporation announced they have applied to the Superior Court of Quebec for protection under the Companies’ Creditors Arrangement Act (“CCAA”) in order to restructure its business and financial affairs as well as a letter on intent between Stornoway and the Secured Creditors, including the Government of Quebec (Ressources Québec).
On September 9, 2019, the Court granted the Initial order in the CCAA proceedings, which was sought in order to implement the letter of intent. A Share Purchase Agreement was entered into, whereby the secured creditors agreed to acquire by credit-bid, through a newly formed entity, substantially all of the business of Stornoway. The agreement was approved by the Court on October 7, 2019 through the issuance of an Approval and Vesting Order, which has innovatively been referred to a "Reverse Vesting Order" in which the non-assumed liabilities (and certain other excluded assets) were extracted from the business by virtue of the Court's order. The share purchase agreement preserved and assumed, among other things, all obligations of Stornoway towards its trade suppliers (including pre-filing obligations) and the near totality of its employees.
Stornoway Diamond Corporation, headquartered in Montréal, Québec, is a leading Canadian diamond exploration and development company. Their flagship asset is the 100% owned Renard Diamond Project, Québec’s first diamond mine. Stornoway also maintains an active diamond exploration program with both advanced and grassroots programs in the most prospective regions of Canada.
McCarthy Tétrault LLP advised the Government of Québec (Ressources Québec) with a team led by Richard O’Doherty and Jocelyn Perreault that included Philippe Bélanger, Louis-Nicolas Boulanger, Vincent Laurin, Jason Phelan, Mary Jeanne Phelan, and Sunny Yang.