Canada-based SQI Diagnostics has announced that its board of directors has received a notice of intention to enforce security issued by Pivot Financial, the firm’s senior secured creditor.
Pivot Financial will enforce its security under Section 244(1) of the Bankruptcy and Insolvency Act.
In accordance with the terms of the credit agreement signed by Pivot Financial and the company on 11 February 2022, as of now, SQI Diagnostics does not have enough cash on hand to repay its indebtedness.
The firm’s board does not anticipate being able to raise enough money soon to repay the indebtedness by the deadline specified in the notice.
Additionally, the board has exhausted all practical options to continue the company and/or to repay the indebtedness. SQI Diagnostics expects that the move is in the company’s and its stakeholders’ best interests to cooperate with Pivot Financial.
As a result, the diagnostic firm’s board has decided to approve Pivot Financial’s early enforcement of security, although the notice’s enforcement is subject to a 10-day notice period.
SQI Diagnostics has also been served with a notice of foreclosure from Pivot Financial under Section 65(2) of the Personal Property Security Act (Ontario) in connection with the enforcement of Pivot Financial’s security under the Credit Agreement.
The company will now move ahead with a voluntary assignment in bankruptcy in accordance with the Act’s provisions, and after the filing is complete, it will make a public announcement confirming that a trustee has been retained formally.
The remaining board members will put in their resignations as directors or officers of the company in conjunction with the expected filing under the Act, which will be effective as soon as the filing is finalised.
According to the provisions of the credit agreement, the company owes Pivot Financial around $8.79m as of the date of the notice. This includes $8m in principal as well as accrued and unpaid interest, fees, costs, and disbursements.
The diagnostic company further confirmed that it has been in contact with the TSX Venture Exchange regarding its proposed filing under the Act.
SQI Diagnostics is also anticipating that trading in its common shares will continue to be suspended and delisted from the exchange after this announcement.
