Vancouver's Donnelly Group is preparing to exit creditor protection, principal Jeff Donnelly told BIV today.
The good news with this, he said, is that all of the establishments under the company's Freehouse Collective umbrella will stay open and more than 500 employees will keep jobs.
A court-approved plan of arrangement and a stay of proceedings against the company is set to expire on July 4.
"The company has to be solvent in order to implement the plan of arrangement," Donnelly said. "So we've done that, and we're buying back the properties that were managed by Freehouse management as a part of our portfolio."
Donnelly would not say how much money he spent to reacquire assets from the Bank of Montreal (BMO) and become the senior secured creditor for the businesses.
"I bought BMO's security so, essentially, I control the process now," Donnelly said.
His company lists 16 businesses on its website, including 11 in Vancouver and five in Toronto.
"Eleven of those locations were purchased back in my deal with BMO," Donnelly said.
"It was kind of confusing. We have a place called Stock Room in Yaletown. Stock Room was a petitioner and BMO had security over it, but we have a little burger joint in front called Hundy, which wasn't a petitioner. I have a nightclub in Toronto, Isabelle's, which is not a petitioner. Sing Sing Commercial is not a petitioner. We opened a new pub, Ballyhoo in Toronto, and that is not a petitioner."
He said that he has restructured the company from what it was when it entered creditor protection in May 2023. Along the way, he expected that the company would exit creditor protection.
Creditors unanimously approved a restructuring plan, and a judge approved the pact as well as a restructuring support agreement.
The plan was later revised, however, and deadlines lapsed, according to a monitor’s report in April.
Part of that included selling what he called "unprofitable" businesses. Donnelly sold Bomber Brewing, for example, to that brewery's founder, Don Farion for an undisclosed amount.
"We closed a couple of locations that weren't working," he said.
In 2019, Donnelly had 26 businesses that were either pubs, cocktail lounges, barbershops or eateries in addition to what he had planned to be nine cannabis stores.
