Global Food and Ingredients: two receivers and an unfiled GST election

Global Food and Ingredients Ltd. traded on the TSX Venture Exchange as PEAS. Its operating company, Global Food and Ingredients Inc., bought peas, beans, lentils and chickpeas, among other crops, per the First Report of the Receiver, Aug. 13, 2024, para. 14, and Sched. "B" (Inman Affidavit), para. 49. Citing GFI Inc.'s management's discussion and analysis for fiscal 2022, the affiant for Siena Lending Group Canada LLC, its asset-based lender, counted more than 500 supplying farmers in North America, about 440,000 metric tonnes of annual processing capacity across four facilities, and revenue up approximately 102% from fiscal 2021. The group invested approximately $6.4 million in a "state-of-the art pea splitting facility" and acquired two consumer brands, Bentilia, a high-protein, gluten-free pasta, and YoFiit, plant-based milk and snacks; YoFiit was sold in or about May 2023, leaving a note receivable from the buyer, per the Simpson Affidavit, May 23, 2024, paras. 10, 13–14.

Peas, the same affidavit says, were "a critical input for over 50% of the GFI Group's products," and "in or about late December of 2023 or early January 2024, competitors acquired substantially all of the pea crop for Western Canada," per the Simpson Affidavit, May 23, 2024, para. 35. On February 1, 2024, Siena funded a revolving asset-based facility that replaced the group's JP Morgan facility, and signed an intercreditor agreement with Farm Credit Canada, the term lender, governing which of them ranked first against which assets. In connection with that refinancing, 35 Oak Holdings Ltd. received 49.9% of Big Sky Milling Inc., the group's pet-food ingredients business in Bowden, Alberta, and lent GFI Inc. $500,000 on a subordinated secured note. "The Debtors faced significant challenges almost immediately after executing the Loan and Security Agreement on February 1, 2024," the affidavit says, per the Simpson Affidavit, May 23, 2024, paras. 12–13, 19, 21, 26, 30–31, 34.

The operating company began an orderly wind-down on or around March 22, 2024. In April, FCC's affiant says, it told FCC's field staff, who had been working toward a sale of the business, that a deal could not close before it exhausted its remaining cash flow reserves. On May 7, GFI Ltd. announced the wind-down; the supply problem, its release said, would "make it near impossible for the Company to continue to operate and service its debts," and each of its directors had resigned, per the First Report of the Receiver, Aug. 13, 2024, Sched. "B" (Inman Affidavit, May 16, 2024), paras. 24, 46, 48–49. That affidavit put FCC's debt at $15,004,907.17 on three real-property loans as of May 13, excluding professional fees, disbursements and accruing interest. The lenders served demands on May 7, and Siena was owed $5,126,801.18 in principal at the close of business on May 22, per the Simpson Affidavit, May 23, 2024, paras. 39, 45.

One hearing, two receivers

Justice Steele heard both applications together on May 30, 2024. FCC sought FTI Consulting Canada Inc. as receiver and manager of the Term Loan Priority Collateral: the debtors' owned and leased real estate in Saskatchewan, the equipment and fixtures on it, a life insurance policy on an executive and the related books and records. Siena sought Richter Inc. over the ABL Priority Collateral, "including, for example accounts receivable and cash." "Given the different nature of the asset classes, Siena and FCC state that it is appropriate and not uncommon for two receivers to be appointed," the judge wrote, noting that the lenders had cited Whyte's Foods Inc., where the court took a similar approach. Among her reasons, she noted Siena's point that the recent revocation of the debtors' grain licences might impair the sale of inventory not yet shipped, per the Endorsement of Justice Steele, May 30, 2024, paras. 1–4, 8. Richter counted about 49 employees at its appointment; by the group's own books, unsecured creditors were owed about $7.1 million, per the First Report of Richter Inc., July 29, 2024, paras. 18, 34.

Three plants

FTI's affiliate FTI Capital Advisors Canada, as sale agent, marketed what the receiver called "three high-speed ingredient processing and storage facilities," per the First Report of the Receiver, Aug. 13, 2024, paras. 22, 26. The receiver contacted 225 parties from mid-July 2024. Forty-four signed non-disclosure agreements, ten letters of interest arrived by September 13, and nine of those bidders were invited into the second phase. At the October 4 deadline the receiver chose Harvest Grain Zealandia Ltd., which it understood to be "a consortium of experienced professionals collectively holding over 75 years of expertise in the pulse industry," for the Zealandia plant, and for the Lajord leasehold C2 Farms, a farming entity that, the receiver understood, "currently produces enough wheat to run the facility on the Lajord Property near capacity," per the Second Report of the Receiver, Nov. 4, 2024, paras. 29–30, 33, 35, 39, 43, 49. Justice Osborne approved both sales on November 12, 2024, per the Approval and Vesting Order (Zealandia Lands), Nov. 12, 2024, p. 1 and the Approval and Vesting Order (Lajord Property), Nov. 12, 2024, p. 1. They closed on November 29, 2024 and January 30, 2025, per the Fourth Report of the Receiver, Apr. 10, 2025, para. 3.

The Vigro plant drew no bids within the sale process's timelines. During the process the receiver had learned that the facility "may encroach on a neighbouring property" and that a pipeline easement might be registered against the land, per the Second Report of the Receiver, Nov. 4, 2024, para. 38. Foodlife Group Inc. bid in late November, and its agreement was signed on December 2, 2024, per the Fourth Report of the Receiver, Apr. 10, 2025, paras. 4, 36, 39. Approving the Vigro sale on February 4, 2025, Justice Steele wrote that "[d]ue to potential encroachment issues regarding the Vigro property, it was a lengthier process than the other two properties and there were difficulties in marketing and obtaining offers for the Vigro property," per the Endorsement of Justice Steele, Feb. 4, 2025, paras. 3, 7, 12. It closed on March 7, 2025. The prices went to the court in confidential schedules sealed pending further order. Richter's counsel had asked that the Vigro schedule be unsealed on closing, and the order of April 23, 2025 terminated that sealing order, per the Endorsement of Justice Steele, Feb. 4, 2025, para. 3, the Ancillary Relief Order, Nov. 12, 2024, para. 5, the Ancillary Relief Order, Feb. 4, 2025, para. 5 and the Distribution, Discharge, and Fee Approval Order, Apr. 23, 2025, para. 6.

What FCC got back

FTI first sought a distribution to FCC in January 2025, then adjourned the request to allow discussions about "certain amounts claimed by the Siena Receiver." The two receivers resolved them with a payment of $34,524 from FTI to Richter for shared receivership costs; Richter, "rather than duplicating efforts," had handled the Wage Earner Protection Program remittances for all eligible employees, per the Fourth Report of the Receiver, Apr. 10, 2025, paras. 41–42, 44–45. On April 23, 2025, Justice Steele noted that FCC was owed about $15 million and that all that remained of its collateral was the debtors' intellectual property and an insurance policy, per the Endorsement of Justice Steele, Apr. 23, 2025, paras. 5–6. Her order authorized and directed FTI, after paying the approved fees, the shared costs and its administrative costs, to distribute to FCC up to the amount of its indebtedness, per the Distribution, Discharge, and Fee Approval Order, Apr. 23, 2025, paras. 4, 7. FTI's fees to March 31, 2025 were $683,548.40, and those of McCarthy Tétrault LLP, its counsel, to April 9 were $453,367.23, each including disbursements and HST, per the Fourth Report of the Receiver, Apr. 10, 2025, paras. 57, 60.