Dominion Diamond Mines ULC has sought bankruptcy protection from creditors after shutting down mining operations to maintain social-distancing protocols during the coronavirus pandemic, WSJ Pro Bankruptcy reported. The company, which operates in Canada’s Northwest Territories, filed for the protection under the Companies’ Creditors Arrangement Act, Canada’s version of chapter 11, with a deal from its current equity owner, the Washington Cos., to provide debtor-in-possession financing as well as serve as a so-called stalking-horse bidder for Dominion’s assets. A stalking horse provides a baseline bid against which a bankrupt company may seek better offers. Dominion said that while it still has strong diamond inventory, its Indian sorting and processing operations in Mumbai and its sales center in Antwerp, Belgium, have been closed due to the pandemic. Dominion has $180 million of inventory that is trapped due to travel and business restrictions imposed by Canada, India and Belgium, Chief Financial Officer Kristal Kaye said in an affidavit filed with Alberta’s Court of Queen’s Bench. Despite the problems facing the diamond industry, Dominion has been forced to make large monthly cash payments for its interests in one of its mines, which has created a liquidity crisis for the company, Kaye said.
