Futura Loyalty files for creditor protection under CCAA
2012-10-17 13:39 CT - News Release
Mr. David Campbell reports
FUTURA ANNOUNCES CCAA FILING
The Futura Loyalty Group Inc., after consideration of all viable alternatives, has determined that it is in the best interests of Futura and its stakeholders for Futura to commence proceedings under the Companies' Creditors Arrangement Act (Canada).
Futura's liquidity position has deteriorated as a result of various factors, including, but not limited to, negative cash flow from operations, high debt levels, an inability to secure additional sources of financing and increasing pressure to make payments to its creditors.
Accordingly, Futura, today, applied for and obtained an order (the "Initial Order") from the Ontario Superior Court of Justice (Commercial List) (the "Court") under the CCAA. The Court has granted CCAA protection for an initial period of 30 days, expiring on November 15, 2012. While under CCAA protection, creditors and others are stayed from enforcing any rights against Futura, giving Futura the opportunity to pursue restructuring alternatives.
Futura will require additional funding in order to implement a restructuring. As a result, the Initial Order also authorizes Futura to borrow funds from four individuals, three of who are directors of Futura (collectively, the "Lenders"), to provide debtor in possession financing in an initial amount of $175,000 but which can increase, subject to further Court approval, up to $300,000 ("DIP Financing"). Pursuant to the Initial Order, the Lenders were granted a charge over all property, assets and undertaking of Futura in priority to all existing creditors. The DIP Financing is expected to assist Futura in financing its working capital requirements, other general corporate requirements and capital expenditures during the initial 30 day period subsequent to the issuance of the Initial Order.
Pursuant to the Initial Order, Harris & Partners Inc., has been appointed as monitor that will oversee the proceedings under the CCAA (the "Monitor"). All inquiries regarding the CCAA proceedings should be directed to the Monitor (905-479-5712). Information about Futura's CCAA proceeding, including copies of all Court Orders made, will be available on the Monitor's website at www.harrisreceivers.com/document_library.html.
"Under the CCAA process, the Company will continue to operate and transact issuance for existing and new customers, expand its business and execute on opportunities for growth and monetization," said David Campbell, CEO. The Company will be considering strategic investment and combination opportunities.
We seek Safe Harbor.