4114159 Canada Inc. (o/a Polar Ice Diamonds) and 9135-8242 Quebec Inc. (o/a Polar Bear Diamonds) (“Polar”) were diamond and jewellery manufacturers and wholesalers that were located in Quebec and Ontario. Polar had distribution arrangements with numerous retailers, including a national brand. Through a related company, Polar also owned a manufacturing facility in Northwest Territories.
Polar’s secured creditor, a European-based financial institution, brought an application for our appointment as receiver following its discovery of accounting irregularities. As Court-appointed Receiver, we investigated transactions between Polar and its alleged vendors. We brought an action in Quebec in respect of suspected fraudulent activities around the consignment of high-value diamonds. We also carried out a sale process and completed a transaction for substantially all of Polar’s assets, excluding its real property. The process resulted in significant distributions to the secured creditor and a settlement between the secured lender and Polar’s principals, which maximized recoveries. Additionally, we participated in an investigation by Belgian authorities in respect of losses suffered by certain Belgium-based diamond wholesalers.