Garrington Capital, a senior secured, asset-based lender serving mid-market companies across the United States and Canada, provided a CAD $7 million debtor-in-possession (DIP) financing facility to a Canadian manufacturer of fresh, ready-made meal solutions, as the company undertakes a court-supervised restructuring under the Companies’ Creditors Arrangement Act (CCAA).
Several years of rapidly rising input costs, combined with long-term, inflexible supply contracts, put sustained pressure on the business, leading the company to file for CCAA protection and pursue an organized, court-supervised restructuring. Garrington’s facility, secured by a court-mandated senior lien on substantially all of the company’s assets and subject to oversight from a court-appointed monitor, is providing working capital to support continued operations while the company completes a formal, court-supervised sale process.
The facility is secured by the company’s accounts receivable, food inventory and equipment. Garrington structured a 75% advance rate against accounts receivable and a $1 million advance cap against food inventory, reflecting an appropriate structure delivered under significant timing constraints with sufficient flexibility to ensure that the company had access to sufficient capital through-out the restructuring process.
“DIP financing exists to buy a business time, when time is the one thing that courts, creditors and employees all need,” Erica Axani, executive vice president and chief risk officer at Garrington Capital, said. “This company had a real business behind the balance sheet problem: quality receivables, disciplined inventory and a credible path forward. Our job was to structure financing that let operations continue while that path is worked out.”
