On November 15, 2022, Groupe Sélection (GS) filed for creditor protection, citing that the COVID-19 pandemic, inflation and the successive increases in interest rates had significant effects on its business.

This is a high-profile and contentious restructuring where the company and its creditors put forward competing applications, each seeking approval of its own monitor, debtor-in-possession (DIP) financing and business plan.

After a 4-day hearing in November 2022, before the Superior Court of Québec (the Court), which is exceptional for an application for an initial order, the Court sided with the GS’ creditors and partners. The Court appointed their proposed monitor (PwC) and approved their proposed interim DIP financing.

In deciding to dismiss the company’s application and grant the creditors’ application, the judge cited a series of reasons, including that there has been mismanagement and inadequate financial reporting, a lack of qualifications and independence on the part of the proposed chief restructuring officer, as well as a lack of transparency on the part of the Debtors, including as to payments made that were seemingly preferential.

GS filed an application to appeal the decision, which application was dismissed.

Davies Ward Phillips & Vineberg LLP acted for several partners and creditors of GS in connection with its proceedings under the Companies’ Creditors Arrangement Act, including:

1. Revera Inc., the majority owner of 25 of the 48 residences operated by GS, whose team was led by Denis Ferland and included Benjamin Jarvis (Restructuring/Insolvency); Sébastien Thériault, Steven Levin, Mylène Nadeau and Charles Larose-Jodoin (Corporate); Louis-Martin O'Neill (Litigation). Revera, being the stalking horse bidder, was successful in acquiring all of the 25 residences, in a process highly contested by the company.
2. Fédération des Caisses Desjardins du Québec (Desjardins), financer of many of GS’ ongoing projects, whose team was led by Christian Lachance (Restructuring/Insolvency).
3. Fonds de Solidarité FTQ, a joint-venture partner of several high-profile projects including the redevelopment of the former Molson brewery in Old Montréal and Espace Montmorency, the largest multi-use residential and commercial development project ever located in Laval. Davies represented Fonds de Solidarité FTQ in its acquisition of GS’s interests in these two projects in the context of a sales process supervised by the Court. Fonds de Solidarité FTQ was selected as the successful bidder at the conclusion of the first auction conducted in Québec in the context of a court-approved sales process. The team was led by Gabriel Lavery Lepage (Restructuring/ Insolvency) and included Sylvie Samson, Jonathan Godin and Ryan Brun (Real Estate); Antoine Le Bihan (Corporate).
4. Blackstone, a joint-venture partner, which acquired Groupe Selection’s interest in a portfolio of seniors' housing residences across Québec, whose team was led by Natasha MacParland and included David Reiner, Sylvie Samson, Jonathan Godin and Ryan Brun (Real Estate).
5. SmartCentres, a joint-venture partner of a $150-million mixed-use complex at the Laurentian Place shopping centre in Ottawa, Ontario, whose team was led by Robin Schwill and included Steven Martin and Pawel Mielcarek (Real Estate).

Gowling WLG (Canada) LLP acted as counsel to Briva and Fiera.

Blake, Cassels & Graydon LLP acted as counsel to Investissement Québec and Otéra.

Osler, Hoskin & Harcourt LLP acted as counsel to Montoni.

Bennett Jones LLP acted as counsel to Herbert Black.

McCarthy Tetrault LLP acted as former counsel to FTI Consulting.

Norton Rose Fulbright acted as counsel to National Bank of Canada.

Fasken Martineau DuMoulin LLP acted as counsel to PwC, CIBC and Bank of Nova Scotia.

Stikeman Elliot LLP acted as counsel to Groupe Sélection.