Canadian payday loan provider seeks bankruptcy protection
TORONTO (Reuters) - Canadian payday loan provider Cash Store Financial Services Inc CSF.TO said on Monday it will seek protection from creditors as it faces liquidity problems resulting from the suspension of its right to offer loans in the province of Ontario.
In February, the Edmonton, Alberta-based company said it was voluntarily delisting its shares from the New York Stock Exchange as its share price had plummeted and it could not meet the exchange's listing requirements.
Last month, Cash Store said it was in talks with some of its creditors to address near-term liquidity issues that arose after its right to offer loans in Ontario, Canada's most populous province, was suspended.
The company's share price has fallen nearly 98 percent over the last two years and its Toronto-listed shares closed Friday at 14 Canadian cents.
Cash Store said on Monday it plans to bring an application in the Ontario Superior Court of Justice to seek protection from creditors under the Canadian Companies' Creditors Arrangement Act (CCAA).
Its board has also authorized the company to enter into a debtor-in-possession (DIP) financing package enabling it to continue operations during the CCAA proceedings.
"Protection under the CCAA and the financing available under the DIP financing agreement will provide Cash Store Financial with the time and stability to attempt to restructure its affairs," the company said in a brief statement.
The company, which employs about 2,000 nationwide, said the CCAA protection and the DIP financing agreement are subject to approval by the Ontario Superior Court of Justice.
Cash Store said it will remain open for business during the CCAA proceeding, and daily lending would not be affected.
(Reporting by Euan Rocha; Editing by Peter Galloway)
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