High-end Toronto restaurant chain McEwan Enterprises has filed for bankruptcy.
McEwan, which is led by celebrity chef Mark McEwan, owns six high-profile Toronto restaurants, including Bymark, Fabbrica and Diwan as well as grocer McEwan Fine Foods and a catering business.
The company filed for Companies' Creditors Arrangement Act (CCAA) on September 28 with about $11 million in outstanding liabilities and a cash balance of approximately $1 million.
The company blamed the "negative impacts of the COVID-19 pandemic" for causing a liquidity crisis.
As part of its restructuring efforts, the company entered into a purchase agreement with Fairfax Financial Holdings (TSX:FFH) and McEwan himself to re-purchase the business under a new numbered company (2864785 Ontario Corp.) which will retain its staff of 268 employees while reducing lease obligations with fewer grocery and restaurant locations.
An Ontario court has yet to approve the sale of the company to 2864785 Ontario Corp. Before entering CCAA proceedings, Fairfax owned 55% of McEwan Enterprises while Mark McEwan himself owns the remaining 45%.
McEwan said in a court affidavit that his restaurant and grocery company has not been profitable since 2017. At the end of last year (2020), McEwan Enterprises had a book value of $24.3 million and total liabilities of approximately $25.1 million. It generated about $30.1 million in revenue in 2020, down from $45.3 million in 2019.
