Shermag Files For Protection From Creditors

Furniture World Magazine

The "Canadian Press" reported that Shermag filed for, protection under the Companies' Creditors Arrangement Act and that the share price on the Toronto Stock Exchanged dropped 67 percent on this news. According to the "Globe And Mail" (www.globeinvestor.com), "Its main lender, Wachovia Capital Finance of Canada, told Shermag last month that it was reducing its borrowing capacity and at least eight suppliers have sent demand letters or instituted proceedings to obtain payment of outstanding invoices, according to the court filing." In addition, the article noted that, "Employees or former employees are also claiming about $2.5-million in salary or compensation, either through demand letters or lawsuits, says the filing. The company, which employed about 1,900 at the end of 2005, is now down to about 360 workers on active status, Shermag's lawyer – Denis Ferland – told the court. Shermag now needs to undertake a major workout that could include the disposal of assets, says the court filing."