Grafton-Fraser-CCAA restructuring under the Companies’ Creditors Arrangement Act

1735825 Ontario Inc. (formerly Grafton-Fraser Inc.) (“Grafton”) was an iconic and leading Canadian retailer in the men’s fashion and big-and tall segments operating under such banners as “Tip Top Tailors” and “Mr. Big and Tall”. Fasken advised Grafton in all aspects of its restructuring under the Companies’ Creditors Arrangement Act (“CCAA”), including all associated agreements, DIP lending arrangements, a sale and investment solicitation process (“SISP”) and the going concern sale of the business. Grafton’s financial difficulties resulted, in part, from the failure earlier in 2016 of its subsidiary that operated the Jones of New York chain of womenswear stores in Canada (which we represented in separate CCAA proceedings in 2016). At the time of its filing in January, 2017, Grafton operated 158 stores located across nine provinces in Canada and had over 1200 employees. Grafton’s total indebtedness at the date of filing exceeded C$100 million, more than C$50 million of which was secured debt. The CCAA court approved a DIP financing agreement and a stalking horse purchase agreement between Grafton and certain entities affiliated with Grafton’s secured term lender, GSO Capital Partners. The SISP didn’t give rise to a third party, qualified bid. According to the terms of the SISP, an entity affiliated with GSO Capital Partners was deemed to be the qualified purchaser. On June 28, 2017, the purchase transaction closed resulting in the going concern sale of the Grafton business, including the continued operation of 140 stores and the employment of over 1000 employees across several provinces in Canada. The matter was important both in the result, and in the process. In addition to the larger transactions (the DIP financing and sale transactions), our department led the client through the renegotiation of well over 100 store leases, which significantly improved the economics of the business and the likely long-term viability of the business.