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Brainhunter Embarks on Restructuring Plan

Posted by sweens on December 2, 2009

Dec 02, 2009 08:45 ET

Brainhunter Embarks on Restructuring Plan

Interim financing and bid process provide continuity

 TORONTO, ONTARIO–(Marketwire Dec. 2, 2009) –


 The Board of Directors of Brainhunter Inc. (TSX:BH) (“Brainhunter or the Company”) announced today that it has authorized the voluntary filing under the Companies’ Creditors Arrangement Act (“CCAA”) for the Company and certain of its principal subsidiaries seeking, among other things, a stay of proceedings against the Company. This means that, with the supervision and protection of the Court, Brainhunter will continue to operate normally while it engages in a process to either sell its business or restructure its liabilities and operations. As one of Canada’s leading technical staffing companies, Brainhunter is continuing all of its current operations during this restructuring process. 

 Over the past months, Brainhunter, its Board of Directors (the “Board”) and financial advisors have conducted an extensive review of strategic alternatives for addressing the Company’s debt obligations. After thorough consideration of all alternatives, the Board initiated this action in the best interests of the Company’s clients, contractors, employees, creditors and other stakeholders. 

 Chairman of the Board Don McCreesh said today, “Brainhunter’s success is rooted in the strong relationships with our clients and contractors, and we have asked the court to grant this order so that we may continue to deliver the high level of service our clients have come to expect from us.”

 An important element of the filing is a Debtor in Possession (“DIP”) interim financing facility, provided by TD Bank. This financing commitment will ensure sufficient liquidity for the continued engagement and compensation of contractors and employees, and therefore uninterrupted service to Brainhunter’s valued clients. Further, the Company will be asking the Court to approve payment of all pre-filing obligations to its contractors and for a charge on its assets to further protect the contractors.

 Brainhunter’s Board of Directors has also received and accepted a ‘Stalking Horse Bid’ from CEO Raj Singh, which has the support of the senior management team. The Company will subsequently be asking the court to approve this bid as part of a court-supervised bid process. The Stalking Horse Bid is effectively an offer to acquire the business as a going concern. It will act as a reserve bid against which other potential parties can also bid for the Company’s assets or offer to sponsor a restructuring plan. This ensures at least one viable and expedited outcome from the restructuring process and the continuation of the Company’s business without disruption of service to its clients.

 Brainhunter, like many Canadian companies, has been financially challenged by the general economic downturn. The decision to file under the CCAA was taken after considerable efforts to recapitalize the Company and reduce corporate overhead. McCreesh added, “We regret that this could not be resolved outside the scope of a Companies’ Creditors Arrangement Act process. However, we believe that a court-supervised process is the best course of action and will clear the way to implement a long-term, viable solution.” 

 As part of the formal legal requirements of this restructuring, the Company has proposed that Deloitte & Touche Inc. be appointed by the Court as Monitor to provide oversight and supervise the CCAA process.

 Brainhunter specializes in the provision of staffing solutions (contingent staffing, managed staffing, permanent staffing and staffing software solutions) to major companies and governments in Canada and the United States. Currently, the largest part of the business is providing IT and engineering staffing consultants, on a contract basis, to major companies and government entities in Canada. The Company also sells recruiting related software including applicant tracking systems (“ATS”) and vendor management software (“VMS”). Brainhunter deploys over 1,500 contractors with an internal staff of over 160 personnel. Operations are ISO 9001:2000 Certified.

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