Toronto GP sponsor in 'liquidity crisis'
Generic drug entrepreneur Barry Sherman has gained court protection for D'Angelo Brands and Steelback Breweries in efforts to save the two former high-flying beverage companies which together owe his family firm more than $120 million.
Justice Sarah Pepall quietly issued an order late last week for a stay of any proceedings by creditors against the two insolvent companies until Sherman's Wasanda Enterprises attempts to file a restructuring plan.
Sherman's son Jonathon, who took over as chief executive officer of D'Angelo and Steelback earlier this month, said in an affidavit that the two floundering companies need court protection to stabilize operations, assess their "future viability" and develop a plan.
Without providing details, Sherman said both companies have cut staff, chopped the number of beverage offerings and reduced marketing costs to stop "financial bleeding." The two companies employ more than 300 people.
But Sherman said those actions are not enough and the two companies "must be substantially restructured." In the request for court protection, he said "the timing of this matter is truly urgent."
Sherman, who could not be reached for comment yesterday, said in the affidavit that the two companies face a "liquidity crisis." However, Wasanda has negotiated debtor-in-possession financing of a maximum $10 million for them.
Sherman said liquidation of assets would leave Wasanda with a "substantial deficiency" in the recovery of its loans to the companies.
Court filings show D'Angelo Brands lost $8.1 million before income taxes in the four months ending Aug. 31. Steelback scrawled red ink of $5.9 million during the same period.
D'Angelo Brands has total assets of almost $50 million and liabilities of $115 million. Steelback holds assets of $8.5 million and $47 million in debts. The two companies owe those debts to Wasanda.
The moves follow the unusual disclosure less than three weeks ago that chief executive Frank D'Angelo was "pleased to announce" that he had sold his "majority" stake in D'Angelo Brands and Steelback Brewery to his "financial partners" for an "undisclosed amount."
He said in a brief interview yesterday he remains chair and a minority shareholder, but has played no role in decision-making during the past three or four weeks.
D'Angelo, who has gained significant public exposure by appearing in many advertisements for the companies' products, confirmed he still owns his home in Forest Hill. More at Toronto Star