TORONTO (Reuters) – Canadian payday loan provider Cash Store Financial Services Inc CSF.TO on Monday he would seek to protect himself from creditors as he faces liquidity problems resulting from the suspension of his right to offer loans in the province of Ontario.
In February, the Edmonton, Alta.-Based company said it was voluntarily delisting its shares from the New York Stock Exchange because its stock price had fallen and it could not meet the listing requirements of the stock Exchange.
Last month, Cash Store said it was in talks with some of its creditors to resolve short-term liquidity issues that arose after its right to offer loans in Ontario, the most populous province, was suspended. from Canada.
The company’s stock price has fallen nearly 98% in the past two years and its Toronto-listed shares closed at 14 cents Canadian on Friday.
Cash Store on Monday announced its intention to file an application with the Ontario Superior Court of Justice for creditor protection under the Canadian Companies’ Creditors Arrangement Act (CCAA).
Its board of directors has also authorized the company to enter into a Debtor-in-Operator (DIP) finance package allowing it to continue operating during the CCAA proceedings.
“The protection under the CCAA and the funding available under the DIP Funding Agreement will provide Cash Store Financial with the time and stability it needs to attempt to restructure its business,” the company said in a brief statement.
The company, which employs about 2,000 people nationwide, said protection under the CCAA and the DIP funding agreement are subject to the approval of the Ontario Superior Court of Justice.
Cash Store said it will remain open for business during the CCAA proceeding and daily loans will not be affected.
Reporting by Euan Rocha; Editing by Peter Galloway