Afton Food seeks protection under bankruptcy act after lenders seek repayment

Afton, through its subsidiaries, is a franchisor in the quick-service restaurant industry, with locations throughout Canada operating under two principal brands, 241 Pizza and Robin's Donuts. In May, Afton reported that it had nearly $34 million in current liabilities. The current portion of its long-term debt totalled more than $26 million.

National Post
July 13, 2003

Afton Food seeks protection under bankruptcy act after lenders seek repayment

BURLINGTON, Ont. (CP) - Afton Food Group Ltd., a fast-food franchisor that includes the 241 Pizza and Robin's Donuts brands, is seeking bankruptcy protection, a few days after its lenders issued a default notice seeking $19.5 million from the company.

Afton said Monday it is unable to repay the balance of the secured loans outstanding and is in the process of applying for protection under the federal Bankruptcy and Insolvency Act as a response to the notice of default, which was issued to the company last Friday.

If that application is approved, Afton said it will file a subsequent application to have its creditor protection transferred to a Companies' Creditors Arrangement Act filing.

CCAA is a process used by companies such as Air Canada or steelmaker Stelco Inc., which declare insolvency and try to restructure their finances with protection from creditors,

"The purpose of the company's applications is to provide an opportunity to participate in the restructuring process so that the interests of all stakeholders are recognized," Afton, based in Burlington, Ont., said in a statement.

Afton received formal notice from secured lenders including Rabobank Nederland Canadian Branch, Credit Union Central of Ontario and Hepcoe Credit Union Ltd. that it was in default of certain provisions of its lending agreement, including late or deficient principal and interest payments.

Afton, through its subsidiaries, is a franchisor in the quick-service restaurant industry, with locations throughout Canada operating under two principal brands, 241 Pizza and Robin's Donuts.

In May, Afton reported that it had nearly $34 million in current liabilities. The current portion of its long-term debt totalled more than $26 million.

Shares in Afton (TSXV:AFF) were unchanged at seven cents in Monday trading on the TSX Venture Exchange.

© The Canadian Press 2004


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