Discovery Air Inc. (“Discovery”), through its subsidiaries, provides specialty aviation and logistics support services across Canada and in select locations internationally, including the US, Chile and Bolivia. Discovery also owned a significant interest in a Quebec-based defence business that provides contracted airborne training services to the Canadian Armed Forces and other military agencies around the world. Discovery’s shares were listed on the Toronto Stock Exchange before a going private transaction in May 2017. Discovery incurred significant losses, largely resulting from a downturn in the mining industry, operational challenges at certain of its subsidiaries and unsustainable debt service costs, including from its $35 million unsecured, publicly-traded debenture obligations.
Discovery filed for CCAA protection and KSV was appointed CCAA Monitor. At the filing date, Discovery’s secured debt obligations exceeded $100 million. KSV worked with Discovery to develop and implement a restructuring strategy, which included a sale process involving separate “stalking horse” offers for Discovery’s equity interest in its three wholly-owned operating subsidiaries and its minority interest in its defence business. KSV, as Monitor, carried out the Court-approved sale process, which resulted in the approval of the four stalking horse transactions. The process addressed the liabilities in Discovery, the parent company in the group. The process was carried out without impairing the operational performance of any of Discovery’s subsidiaries during the CCAA proceedings. A DIP facility was put in place to fund the business during the proceedings. The proceedings resulted in the completion of four separate going concern share transactions with an estimated value of approximately $60 million.