November 4, 2019

Dear NAFA Customer,

On October 31, 2019, North American Fur Auctions (NAFA) sought and was granted creditor protection under the Companies’ Creditors Arrangement Act (CCAA) by the Ontario Superior Court of Justice. Although different in many technical respects, a CCAA proceeding is akin to U.S. procedure under Chapter 11 of the US Bankruptcy Code.

Companies that have filed for CCAA protection in the past include Air Canada and Stelco (the Steel Company of Canada). A CCAA Filing is NOT a bankruptcy and is NOT a receivership. NAFA management is currently operating the business.

NAFA’s tremendously difficult decision to enter into CCAA follows a number of months of struggle and hard work of trying to refinance the Company. NAFA has been unable to negotiate a final comprehensive refinancing deal, thereby leading to the CCAA protection filing.

The CCAA procedure gives us the breathing room and the operational ability that we need to decide on next steps. In the immediate future, NAFA is proceeding to complete the sale of its ranched mink loan portfolio to Saga Furs. Thereafter we intend to organize the proper and appropriate disposition or return of all furs held by NAFA and to consider future options within the context of the CCAA proceeding. At this time, it is unlikely that NAFA will conduct its own auction in March 2020 for either wild or ranched fur.

In accordance with the CCAA filing, the court-appointed monitor, Deloitte Restructuring Inc. (Deloitte), who provides oversight, will initiate a mailer to all Company creditors in the coming week. The CCAA Court order of October 31 prevents the Company from making payments to creditors that were outstanding prior to the time of filing. Depending on the outcome of the restructuring, a claims process may be administered that will address what will be paid for these pre-October 31 liabilities. There is no set timeline for this process.

If you wish to obtain more information from the Monitor, Deloitte has set up a website that makes available relevant Court documents. The address is https://www.insolvencies.deloitte.ca/en-ca/nafa. Deloitte will also be setting up a phone hotline and email address should you wish to obtain information from them directly. Both will be posted on the Monitor’s website once operational, which is expected in the next day or two.

More details will be released in the coming days and weeks. We appreciate your patience in this trying time for the company, its customers and stakeholders.


Sincerely,


Douglas Lawson
President & CEO

Douglas Lawson wrote, "The CCAA Court order of October 31 prevents the Company from making payments to creditors that were outstanding prior to the time of filing.", which means NAFA is not going to pay the trappers, that it screwed squat anytime soon, but that NAFA managers are going to continue to be paid, while waiting for the mess they created to be resolved. The NAFA manager's likely source of income will be the furs of the trappers they screwed, that they have not sold yet.

Keith

Is Deloitte French for 'deal with it', lol. What a freaking mess, this bunch is even more crooked than I thought 20 years ago when I quit dealing with them.

Trappers will once again be left holding the bag and grabbing their ankles at the same time!

Chris

Such a shame.

But he did thank everyone for their patience. I thought that was very touching.

I think they should hold an Auction in March 2020. That would be interesting.

Jim Gibb is a decent stand-up guy. I went thru Trapper's College with him. Don't beat up on Gibb just because he had the misfortune to be associated with a mink ranching Ponzi scheme.

Learned my lesson about NAFA in 1987 and never forgot it.

Boy times sure don't seem to be very good. Fur at about an all time low, and now this. Not good.

Looks like they are re structuring and will be back in business in the future in some morphological form.
FHA had to cancel their Trappers convention with all the new shippers signing up-said they wont have time to put on the convention-priorities.

Like I've been saying for a LONG, LONG TIME.......BOHICA !!!!

w

I doubt very many fur trappers will do business with them if NAFA does come back. Most people have enough sense not to do business with someone who screwed them and lied about making it right.

Keith

If they get good prices for the fur it wont matter a lick.

The Companies' Creditors Arrangement Act (commonly referred to as the "CCAA" or the "CC, double A") is a Federal Act that allows financially troubled corporations the opportunity to restructure their affairs. By allowing the company to restructure its financial affairs, through a formal Plan of Arrangement, the CCAA presents an opportunity for the company to avoid bankruptcy and allows the creditors to receive some form of payment for amounts owing to them by the company.
The CCAA is restricted to larger corporations, as a corporation must have amounts owing to creditors in excess of $5 million to be eligible to use the Act. Corporations that do not reach this $5 million threshold can utilize the Division I Proposal under the Bankruptcy and Insolvency Act. The CCAA also allows a company, if it so chooses, to address its shareholders in addition to its creditors. Typically, when the shareholders of the company are impacted by the Plan of Arrangement, they are often given the opportunity to vote on the Plan.
The process begins in the Court system when the company applies to the Court for protection under the CCAA. The Court will issue an Order giving the company 30 days of protection (often referred to as the "Stay") from its creditors to allow for the preparation of the Plan of Arrangement. The Court can extend the Stay against the creditors upon further application to the Court by the company. Typically, the Court will continue the protection beyond the initial 30-day period if the company can demonstrate that it is likely that it will file a Plan of Arrangement and an extension of the Stay is not prejudicial to the creditors, as a whole. There is no time limit on how long the Stay can be extended. During the Stay period, the company will often continue operating, although it may commence restructuring activities at any time.
A Monitor is an independent third party who is appointed by the Court to monitor the company's ongoing operations and assist with the filing and voting on the Plan of Arrangement. The Monitor's duties include monitoring the business, reporting to the Court on any major events that might impact the viability of the company, assisting the company in the preparation of the Plan of Arrangement, notifying the creditors (and shareholders) of any meetings and tabulating the votes at these meetings. The Monitor prepares a report on the Plan of Arrangement that is usually included in the mailing of the Plan.
The Plan of Arrangement is the proposal that the company is presenting to its creditors on how it intends to deal with debt it owes at the time of the initial filing with the Court. There are no restrictions on what the Plan can entail. It is not uncommon to see offers to pay a percentage on the dollar of debt, either as a lump sum or over a period of time. Plans can include an offer of shares of the company in exchange for the debt outstanding or a combination of cash and shares. The debtor can identify a particular creditor or group of creditors as "unaffected." Unaffected creditors are included in the Plan and are not to be paid in the normal course. One of the benefits of the CCAA is that it allows for this flexibility when trying to put together a Plan.
In order to be able to vote on the Plan and receive any distribution under it, a creditor must file a Proof of Claim with the Monitor. The Proof of Claim sets out what is owed to the creditor and is reviewed by the Monitor and the company. Any discrepancies between the creditor's Proof of Claim and the company's records are investigated by the company. The Plan will outline the procedures for dealing with disputed claims.
Ultimately, the company files its Plan of Arrangement and forwards it to the creditors/shareholders. A meeting of the creditors (and shareholders, if applicable) is called to vote on the Plan. For the Plan to be binding on each class of creditors, a majority of the proven creditors in that class, by number, together with 2/3 of the proven creditors in that class, by dollar value, must approve of the Plan presented to them. If a class of creditors approves the Plan, it is binding on all creditors within the class, subject to the Court's approval of the Plan. If all of the classes of creditors (and shareholders, if applicable) approve the Plan, the Court must then approve the Plan as a final step. Upon Court approval, the company continues forward as outlined under the Plan until it has satisfied the requirements under the Plan.
If a class of creditors or the Court does not approve the Plan, the company does not automatically go into bankruptcy, but the Stay is lifted. However, once the Stay has been lifted, the pressures that caused the company to initially file for CCAA protection from its creditors will likely return and, accordingly, it is quite likely that the company will be placed into receivership or bankruptcy.

NAFA would have to be able to give significantly better prices than the competition that is now growing stronger. NAFA's management also has already proven to be poor at running a business and dishonest.

Keith

This appears to be the perfect scenario for those folks that claimed they would trap even if fur was worthless.

I wouldn't say fur is worthless.The court paperwork says NAFA was doing 200 mil in sales each year.

Maybe some won't, but I wouldn't be one. What they did to me after they became nafa, I told them they would never see one piece of a fur from me....EVER. And I ment it. I must have stronger convictions than some, I won't travel or hunt in states like Ca,Co, and NM will be next on the list if they keep screwing around. I spend my money with trapper friendly people, and have no plans to change. Will I give them a pass.....H3LL No! They have been lying and cheating for years, and J trapper and I will boycott those jackwads, even if no one else did!

To quote Walleyed.....BOHICA

I will indeed be trapping. I quit nafa several years ago, will continue to ship to fha, and market select pelts elsewhere. I make way more money working than I ever have trapping. I trap for the sake of trapping. Just me.
Apparently doesn't work for everyone.

Add me to your list of boycotters, Lee!