Pharmalab, Ideal Protein and Laboratoires COP are sheltering themselves from their creditors, the day after the “temporary” layoff of its 235 workers.
In a press release, the company announces that the Superior Court of Quebec agreed on Tuesday to grant the company, made up of Pharmalab, Laboratoires COP and Ideal Protein, all chaired by the American Dawn Halkuff, the protection provided for under the Creditors Arrangement Act.
“Despite Ideal Protein’s efforts to restructure its business, the measures put in place by the company were not, on their own, sufficient to offset the impacts of the COVID-19 pandemic and the negative trends associated with the weight loss industry,” the statement explained. “Ideal Protein sincerely regrets the impact that the restructuring of its business will have on its valued stakeholders. »
On Monday, in Lévis, the personnel who presented themselves at the door of Pharmalab encountered closed doors and a poster urging them not to cross them. “The cameras are recording,” even warned the note. The temporary layoff notice, presented to all 170 employees, mentioned that the return to work would take place, according to the company’s estimate, in “less than six months”.
The press release issued on Tuesday announces the restructuring of the company and does not hide its intention to find a buyer. “The company anticipates that it will shortly seek court approval to initiate a formal sale and investment solicitation process,” the company said, “with the goal of implementing a transaction.” »
The Court upheld the appointment of RC Benson Consulting to lead the corporate restructuring and appointed Ernst&Young to oversee operations in the Creditors Arrangement Act proceedings.
A dire financial situation
In the documents presented to the Superior Court on Monday appear the financial setbacks of the group. In 2017, the company reported a net profit of $75.9 million. Five years later, this performance had dropped by 87% and Ideal Protein recorded net revenues now reduced to $10.2 million.
In the first six months of 2023, the company recorded a net loss of $10.5 million.
Company assets are $98.4 million in 2023, down 35% from the previous year. Its liabilities amount to $232.6 million, according to documents prepared by controller Ernst & Young. The company notably owes $192 million to the Bank of Montreal and Desjardins, plus $20 million in arrears. In 2023, the document points out, the company has not made any payments to its lenders, neither in capital nor in interest.
The loan agreement, entered into in 2015, was due to mature in September 2020.
“In summary, indicates the documents prepared by the controller Ernst & Young and presented to the Superior Court on Monday, Ideal Protein has received and continues to receive substantial losses, the erosion of its capital is complete and its liquidity is limited, to the point where the company is no longer solvent. »
A total of 235 affected employees
The company made up of Pharmalab, Ideal Protein and COP Laboratories presents itself as “a company specializing in the creation of solutions for health and well-being based on a ketogenic protocol”. The entity produced “dietary” and “natural” products and food supplements distributed and sold in more than a thousand authorized points of sale in Quebec and the United States.
According to the motion presented in court, the company has approximately 235 employees, of which 40 to 50 were employed by Ideal Protein, all in the United States, and approximately 170 employed by Pharmalab, in Lévis. COVID would have precipitated the company’s downfall. Although its manufacturing and distribution activities have been able to continue despite the pandemic, the forced closure of its outlets has undermined its business model and dried up its main source of income.
On Facebook, the English-speaking page of Ideal Protein claims 185,000 subscribers. Ideal Protein-Quebec, which posted live discussions, recipes and benevolent testimonials about the “Ideal Protein protocol”, had about a thousand.
