The business was facing a liquidity crunch and he and partner Fairfax Financial Holdings Ltd. were forced to seek court-monitored protection from creditors to undertake a major restructuring, viewed as the only option after they were “unable to achieve a comprehensive out-of-court resolution that would secure the long term viability of the McEwan Group.”
He noted that the court-monitored restructuring follows a string of creditor protection and insolvency filings by restaurants in Canada and the United States earlier in the pandemic, including Toronto’s King Street Company Inc. — owner of the high-end Italian restaurant Buca and steakhouse Jacobs & Co.— and U.S.-based chains California Pizza Kitchen, Chuck E. Cheese and Ruby Tuesdays.
Following the declaration of the global pandemic in March of 2020, the company adopted a “cash conservation” approach to deal with mandatory closures, restrictions on customer capacity, and suffered from reduced foot traffic as diners stayed home. Finkelstein said restaurants, which have razor-thin margins in the best of times, have been hit with higher expenses during the pandemic, from additional cleaning and constructing partitions to meet COVID-19 health protocols, to food waste when operating and capacity restrictions were placed on them on short notice.
Many restaurants, including McEwan’s, have also been surviving by tapping the Canada Emergency Commercial Rent Assistance program and the Canada Emergency Business Account, which extended interest-free, partially forgivable loans of up to $60,000 to small businesses.
The business entity will go bankrupt and Mark will remain fine. Meanwhile thousands of local businesses and restaurant owners will go broke because of the lockdowns.