TORONTO — According to a story on BNN Bloomberg, celebrity chef Mark McEwan’s McEwan Enterprises Inc. (MEI) filed for creditor protection last month, citing a “liquidity crisis”as a result of the COVID-19 pandemic.
MEI owns six Toronto restaurants, including One Restaurant and Fabbrica, as well as a catering business and McEwan Fine Foods supermarkets. According to the Globe and Mail, the company claimed more than $10 million in liabilities when it filed for protection under the Companies’ Creditors Arrangement Act (CCAA) on September 28, including nearly $540,000 in overdue or deferred rent, as well as millions owed to suppliers, banks and shareholders.
“Although many of MEI’s locations have historically been profitable, certain … locations have been under-performing for a number of years, causing a significant strain on the business as a whole,” says a court filing from the company’s appointed monitor, Alvarez & Marsal Canada Inc. “Further, the negative impacts of the COVID-19 pandemic, including extensive restaurant closures, capacity constraints and other COVID-19 related measures over the past 18 months, have been significant and have resulted in material EBITDA losses and liquidity challenges for the consolidated MEI business.”
Court filings detail how although MEI’s restaurants were forced to close for 10 months due to COVID-19, some assets have been “under-performing for a number of years,” which has impacted the business overall despite the success and prestige of some of its establishments.
As part of its re-structuring efforts, the company entered into a purchase agreement with Fairfax Financial Holdings Ltd. and McEwan himself to re-purchase the business under a new numbered company (2864785 Ontario Corp.) which will retain its staff of 268 employees while reducing lease obligations with fewer grocery and restaurant locations. The court has yet to approve the sale of the company to 2864785 Ontario Corp.
Before entering CCAA proceedings, Fairfax owned 55 per cent of MEI while McEwan owns the remaining 45 per cent. The ownership for the numbered company will remain the same, according to Robert Chadwick, a lawyer at Goodmans LLP, which is representing MEI during the CCAA proceedings.