Morris Group has been granted more time and financing to work its way out of financial difficulty.
Queen’s Bench Justice R.S. Smith approved an extension Jan. 16 for the company to continue to operate under creditor protection. He also approved a sale and investment solicitation process, or SISP, to allow the company to reorganize.
Morris now has until March 27 to implement the restructuring plan that includes selling assets and laying off or terminating employees without threat of any proceedings or enforcement against it.
Potential bidders have until March 9 to indicate interest and qualified bidders will have to submit offers by April 10.
Morris was also granted $5.7 million in interim financing through its primary secured creditor, BMO.
A claims process to determine creditors has been approved with proof of claims to be filed by March 2.
Court documents note that the company suffered a severe drop in revenue due to warranty issues with its Quantum Drill, international trade disputes, successive years of poor weather, loss of access to a factoring facility that would have improved cash flow, an inventory bulge, a BMO loan agreement with additional covenants, and the demand for payments of sub-debt.
As of Jan. 8, the Morris Group companies had a total of $55 million in debt, including about $42 million in secured debt and $13 million of unsecured debt owed to more than 650 creditors, such as suppliers and dealers.
Seniors secured lenders are BMO, Avrio, Farm Credit Canada, Trumpf Finance, De Lage Landen, Kubota Canada and Wells Fargo.
The court-appointed monitor, Alvarez and Marsal, noted that initiating a SISP immediately would address liquidity and operational concerns.
“The companies, with the support of the monitor, believe that a SISP which provides for the greatest flexibility in soliciting and selecting bids from interested parties for the sale of or investment in the shares or assets of the companies, a refinancing, reorganization, recapitalization, restructuring, joint-venture, merger or other business transaction involving the companies, or some combination thereof, will provide the greatest chance for the Morris Group to complete a restructuring of its operational and financial affairs,” said the monitor’s report.
Although Morris has not said which company it might sell, the Virden, Man., sales and service facility is not profitable, according to an affidavit filed by chief operating officer Kevin Adair.