November 4, 2019
Dear NAFA Customer,
On October 31, 2019, North American Fur Auctions (NAFA) sought and was granted creditor protection under the Companies’ Creditors Arrangement Act (CCAA) by the Ontario Superior Court of Justice. Although different in many technical respects, a CCAA proceeding is akin to U.S. procedure under Chapter 11 of the US Bankruptcy Code.
Companies that have filed for CCAA protection in the past include Air Canada and Stelco (the Steel Company of Canada). A CCAA Filing is NOT a bankruptcy and is NOT a receivership. NAFA management is currently operating the business.
NAFA’s tremendously difficult decision to enter into CCAA follows a number of months of struggle and hard work of trying to refinance the Company. NAFA has been unable to negotiate a final comprehensive refinancing deal, thereby leading to the CCAA protection filing.
The CCAA procedure gives us the breathing room and the operational ability that we need to decide on next steps. In the immediate future, NAFA is proceeding to complete the sale of its ranched mink loan portfolio to Saga Furs. Thereafter we intend to organize the proper and appropriate disposition or return of all furs held by NAFA and to consider future options within the context of the CCAA proceeding. At this time, it is unlikely that NAFA will conduct its own auction in March 2020 for either wild or ranched fur.
In accordance with the CCAA filing, the court-appointed monitor, Deloitte Restructuring Inc. (Deloitte), who provides oversight, will initiate a mailer to all Company creditors in the coming week. The CCAA Court order of October 31 prevents the Company from making payments to creditors that were outstanding prior to the time of filing. Depending on the outcome of the restructuring, a claims process may be administered that will address what will be paid for these pre-October 31 liabilities. There is no set timeline for this process.
If you wish to obtain more information from the Monitor, Deloitte has set up a website that makes available relevant Court documents. The address is
https://www.insolvencies.deloitte.ca/en-ca/nafa. Deloitte will also be setting up a phone hotline and email address should you wish to obtain information from them directly. Both will be posted on the Monitor’s website once operational, which is expected in the next day or two.
More details will be released in the coming days and weeks. We appreciate your patience in this trying time for the company, its customers and stakeholders.
Sincerely,
Douglas Lawson
President & CEO