On July 8, 2020, DAVIDsTEA Inc., a leading tea merchant in North America, announced a restructuring plan under the Companies' Creditors Arrangement Act (CCAA) and in the United States under Chapter 15 of the United States Bankruptcy Code in order to accelerate its transition to an online retailer and wholesaler of high-quality tea and accessories. During the restructuring, DAVIDsTEA continued to run its day-to-day operations.
On June 11, 2021, DAVIDsTEA’s Plan of Arrangement under the CCAA was unanimously approved by the requisite majorities of creditors of DAVIDsTEA and of DAVIDsTEA (USA) Inc., its wholly-owned U.S. subsidiary. On June 16, 2021, DAVIDsTEA obtained a sanction order for the Plan of Arrangement from the Québec Superior Court and an order from the United States Bankruptcy Court for the District of Delaware recognizing the sanction order. DAVIDsTEA then funded PwC, the Court-appointed Monitor in the CCAA proceedings, with approximately CDN $18 million for distribution to its creditors. The funding of PwC completed DAVIDsTEA’s legal obligations under the Plan of Arrangement.
From the outset, Fasken advised DAVIDsTEA in connection with its restructuring plan. DAVIDsTEA was able to reopen 18 stores of its stores in Canada, preserve approximately 455 jobs and continue its online retail sales and wholesale activities, while emerging from CCAA protection with a new business model.
The restructuring is particularly noteworthy as it pertains to a public company whose shares continued to trade on NASDAQ during the CCAA proceedings, and was completed in less than a year, a very short period for a CCAA restructuring.
Fasken’s legal team was led by Luc Béliveau (Insolvency & Restructuring) and included Nicolas Mancini and Éliane Dupéré-Tremblay (Insolvency & Restructuring) and Neil Wiener (Securities).
