CANADA: Azure Dynamics files for bankruptcy

28 March 2012 | News | Source: Graeme Roberts

Azure Dynamics, whose auto industry credits include developing an electric powertrain for Ford's Turkish built Transit Connect light van, has filed for bankruptcy protection in the Supreme Court of British Columbia "for an initial order under the companies' creditors arrangement act (CCAA), it said in a statement.

"The company expects that the [order] will provide for a stay of proceedings while the company and its subsidiaries pursue restructuring alternatives under CCAA protection," the statement added.

"The board of directors... has also authorised the filing of a voluntary petition under Chapter 15 of title 11 of the United States Bankruptcy Code to seek recognition and enforcement in the US of the initial order requested in the CCAA proceedings."

Azure has also canned a previously announced offering of units.

"The decision to abandon the offering and commence CCAA proceedings comes after several weeks of formal and informal communications with staff of the Ontario Securities Commission", said CEO Scott Harrison. "Despite including detailed risk factor and other disclosure in the preliminary prospectus regarding the company's liquidity and financial hardship, and after several weeks of attempting to satisfy the demands of staff for additional information and disclosure, the company was informed on 23 March that staff's recommendation, based on the current draft of the prospectus, would be that a receipt not be issued for the prospectus on the basis that it would not be in the public interest to do so."

Azure said its current liquidity position left it without sufficient time or cash resources to pursue its right to be heard before the director and, if necessary, to appeal any decision, so directors decided the best remaining alternative was to pursue a restructuring under the protection of CCAA.

Chairman Cam Deacon said: "In our view, any determination of what is in the public interest should weigh all relevant interests, including the interest of the company in being able to access the capital markets and the interests of the company's existing shareholders, employees, suppliers, customers and other stakeholders.

"Potential investors had the benefit of very detailed risk factor and other disclosure regarding the company's liquidity and financial hardship, and the company was prepared to include in the prospectus virtually all additional disclosure demanded by OSC staff except where it was not possible for the company to include the demanded disclosure.

"In the circumstances, we are deeply troubled by the notion that investor protection would require allowing such unfortunate consequences to be visited upon a world industry leading company and its existing shareholders, employees, suppliers, customers and other stakeholders, particularly given our understanding that investors themselves, having had the benefit of such detailed disclosure, continued to have significant interest in the offering.

We wish to convey to [Azure's] stakeholders both our terrible sadness at this outcome and our commitment to pursuing the best outcome remaining available in the circumstances through CCAA proceedings."