Taiga seeks bankruptcy protection
The ongoing struggles faced by Quebec-based Taiga Motors as it tries to become an electric snowmobile and personal watercraft pioneer hit another snag when the company filed for the equivalent of bankruptcy protection in Canada.
The June 10, 2024, filing under the Canadian Companies Creditors Arrangement Act is similar to a Chapter 11 bankruptcy filing in the U.S. That means that the company is seeking protection from creditors while continuing its operations and operating under the watchful eyes of a court-appointed trustee. In this case, that trustee is Deloitte Restructuring Inc. It is not to be confused with a Chapter 7 bankruptcy, which results in the closing of a business and liquidation of assets.
Many big companies (including Apple and General Motors, for example) have successfully emerged from a Chapter 11 filing. However, more often, a company filing for such protection will seek new investment or an outright sale. If that fails, though, a Chapter 7 may be down the road.
Taiga’s latest move follows layoffs and a production halt announced in April.
The Canada-based Financial Post posted an interesting background story on the Taiga saga on its website this afternoon. It’s worth a read for those curious about how Taiga got to this point and what may happen next.
Oddly, it was about a year ago that we were in Vermont for a test drive of Taiga’s personal watercraft.
Here’s the official announcement from Taiga:
Taiga Obtains Interim DIP Facility and Interim Order for Creditor Protection under CCAA to Pursue a Restructuring and SISP Process
MONTREAL, July 10, 2024 /CNW/ – Taiga Motors Corporation (TSX: TAIG) (“Taiga” or the “Company“) today announced that Taiga and its subsidiaries (collectively, the “Taiga Group“) have sought and obtained from the Superior Court of Québec (the “Court“) (i) an order (the “Initial Order“) providing them with creditor protection pursuant to the Companies’ Creditors Arrangement Act (the “CCAA“), and (ii) an order authorizing the Taiga Group to pursue, under the supervision of the Court, a formal sale and investment solicitation process (the “SISP“), which process was initiated prior to the CCAA proceedings that were commenced today (the “CCAA Proceedings“).
As part of the Initial Order, the Court ordered, among other things, a stay of proceedings in favour of the Taiga Group for the initial period provided under the CCAA (the “Stay Period“) and the appointment of Deloitte Restructuring Inc. as monitor of the Taiga Group during the CCAA Proceedings (in such capacity, the “Monitor“), and it authorized the Taiga Group to enter into an interim financing facility (the “DIP Facility“) with Export Development Canada, the Company’s most significant secured creditor. The DIP Facility consists of a non-revolving multiple draw credit facility of up to a maximum principal amount of $4.4 million (of which the Court approved an initial draw and disbursement of $1.0 million in connection with the Initial Order), which will be used to finance the Taiga Group’s working capital requirements and to implement the restructuring contemplated in the CCAA Proceedings, including the pursuit of the SISP.
As disclosed in its various press releases and public filings leading up to this announcement, the Company has been actively reducing its cost structure and has been continuously seeking various alternatives to fund its operations. However, following a review and after careful consideration of all available alternatives and in consultation with legal and financial advisors, the directors of the Company unanimously determined that it was is in its best interests to commence the CCAA Proceedings, with a view to pursue the SISP and implement one or more transactions with respect to the Taiga Group’s business and assets.
The board of directors of the Company and management will remain responsible for the day-to-day operations of the Company under the general oversight of the Monitor.
It is anticipated that the Toronto Stock Exchange (the “TSX“) will place the Company under delisting review and there can be no assurance as to the outcome of such review or the continued qualification for listing on the TSX.
The Taiga Group will be returning before the Court shortly in order to seek the issuance by the Court of an amended and restated initial order, which, among other things, is expected to provide for an extension of the Stay Period until October 4, 2024 and a further required drawdown of funds under the DIP Facility.
What happens in the meantime for buyers who’s PWC machines do not work due to a “core issue”, which translates to, PWC needs entire battery replaced? We purchased an Orca less than a year ago and only was able to ride it 2.4 hours before it completely became inoperatable and started throwing codes left and right. Now three months later, we are told that the battery needs to be completely replaced and are left with no answers on how or when Taiga will be able to address the matter. Does the consumer have any protection here?