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DavidsTea is seeking court protection from creditors so it can continue operating while it restructures and plans to close a significant number of its stores, the Globe and Mail reported. The Montreal-based company said today that it will seek an order in Quebec Superior Court to allow it to restructure under the Companies’ Creditors Arrangement Act. It also plans to seek similar orders for its U.S. subsidiary under chapter 15 of the U.S. Bankruptcy Code. The company said during the restructuring process it plans to continue operating online through davidstea.com and its wholesale distribution channel, which supplies grocery stores and pharmacies. The chain’s stores have been shut since March 17 due to the COVID-19 pandemic. “The transformation of our business model is necessary to position the company for a return to profitability,” chief financial officer Frank Zitella said in a statement. “DavidsTea has experienced a multi-year decline in brick and mortar sales and the post COVID-19 retail environment creates significant challenges for our unique in-store customer experience.” It had warned in mid-June that it hadn’t paid rent on any of its stores for April, May and June and that it may seek a formal restructuring.

The Justice Department is examining whether scandal-plagued German payment company Wirecard AG played a critical role in an alleged $100 million bank-fraud conspiracy connected to an online marijuana marketplace, the Wall Street Journal reported. Two businessmen have already been charged in the alleged fraud, accused of conspiring with third-party payment processors and others to trick U.S. banks into approving credit-card payments for marijuana products. The men were able to do this, prosecutors said, by using phony companies with accounts at offshore merchant banks that in turn earned steep fees off the transactions. The Manhattan U.S. Attorney’s office and the New York field office of the Federal Bureau of Investigation are examining whether Wirecard played a role in the alleged conspiracy by serving as both a payment processor and an offshore merchant bank. The authorities are also considering the possible role of several former or current top Wirecard executives. The attention from U.S. authorities adds to the myriad legal woes facing Wirecard, which was once more valuable than any German bank, including Deutsche Bank AG. The company has rapidly unraveled following revelations last month that more than $2 billion it had claimed to have may never have existed.

Markus Braun built Wirecard AG from an obscure firm based in a small town outside of Munich into a global electronic-payments giant, the Wall Street Journal reported. From its perch at the crossroads of online commerce, Wirecard extracted fees for processing credit-card transactions on behalf of businesses. It pushed into emerging markets, bought up smaller firms and struck partnerships to recruit more customers. In its financial statements, sales and profits ticked steadily upward. Wirecard claimed to process $140 billion of transactions a year on behalf of a quarter million businesses, making it a rival of Square Inc. and PayPal Holdings. It was briefly valued at more than any German bank. Then it came apart at light speed — an unraveling reminiscent of energy firm Enron Corp.’s rapid collapse nearly two decades ago. On June 17, Wirecard was valued at more than $14 billion. Eight days later, it filed for the German equivalent of bankruptcy. Wirecard revealed on June 18 that $2 billion it had told its auditors was in a pair of Philippine banks wasn’t there at all. The sum is equivalent to the company’s entire profit over more than a decade. The company and its auditors say that the missing money probably never existed. German regulators and prosecutors are digging into the company’s books to unravel whether one of Europe’s most promising financial-technology firms used fictitious revenue to inflate its sales and fool investors about the health of the company.

Grupo Aeromexico SAB, Mexico’s second-largest airline, filed for bankruptcy in the U.S., becoming the latest in a string of Latin American carriers to seek court protection after the COVID-19 pandemic caused a severe downturn in travel, Bloomberg News reported. The carrier will “continue operating and use chapter 11 as a way to strengthen its financial position and liquidity,” according to a statement to the Mexican stock exchange yesterday. Aeromexico said that the goal will be “protecting and preserving its operations and assets and implementing the necessary operational adjustments to face COVID-19-related impact.” Aeromexico saw the number of passengers it carried plummet more than 90 percent as governments grounded flights and travelers stayed home. The airline struck deals with labor groups and suppliers in May to cut costs by more than half to around $50 million a month, while offering its employees unpaid leave. Latin American airlines, unlike their counterparts in the U.S. and Europe, have received scant government support even as travel demand plunged and the coronavirus prompted countries to seal borders. The region’s largest carrier, Latam Airlines SA, filed for chapter 11 bankruptcy in May just weeks after Avianca Holdings SA, Colombia’s biggest airline.

A stalking-horse bid for Cirque du Soleil Entertainment Group was dismissed as inadequate by lenders during a Quebec court hearing yesterday into the company’s restructuring, Reuters reported. Canada’s once high-flying Cirque received initial protection from its creditors, after the COVID-19 pandemic forced the famed circus operator to cancel shows and lay off artists. Montreal-based Cirque, which grew from a troupe of street-performers in the 1980s to a company with global reach, has slashed about 95 percent of its workforce and suspended shows due to the pandemic. The company filed for bankruptcy protection on Monday. The company has signed an agreement with its existing investors private equity fund TPG Capital, China’s Fosun International Ltd, and Canadian pension fund Caisse de depot et placement du Québec under which the consortium will take over Cirque’s liabilities and invest $300 million to support a restart. As part of the investment, government body Investissement Québec will provide $200 million in debt financing.

Canada’s Cirque du Soleil Entertainment Group filed for bankruptcy protection yesterday as the COVID-19 pandemic forced the famed circus operator to cancel shows and lay off its artistes, Reuters reported. The Montreal-based entertainment company, which runs six shows in Las Vegas, has struggled to keep its business running amid coronavirus restrictions that started in March, forcing it to lay off about 95 percent of its workforce and temporarily suspend its shows. “With zero revenue since the forced closure of all of our shows due to COVID-19, the management had to act decisively to protect the company’s future,” Chief Executive Officer Daniel Lamarre said. The company has signed an agreement with its existing investors private equity fund TPG Capital, China’s Fosun International Ltd, and Canadian pension fund Caisse de depot et placement du Québec under which the group will take over Cirque’s liabilities and invest $300 million to support a restart. As part of the investment, government body Investissement Québec will provide $200 million in debt financing. But creditors are unlikely to agree to the deal, which could result in existing debt holders getting about 45 percent equity in the restructured company.

Wirecard North America Inc., a unit of German payments company Wirecard AG, yesterday said that it has put itself up for sale, days after the troubled parent firm filed for insolvency. The U.S.-based unit, which was bought by Wirecard in 2016, said an investment bank is coordinating the sale process. The unit was formerly known as Citi Prepaid Card Services. Last week, Wirecard filed for insolvency owing creditors almost $4 billion after disclosing a 1.9 billion euro ($2.14 billion) hole in its accounts that its auditor EY said was the result of a sophisticated global fraud. The company said on Saturday it would proceed with business activities after the insolvency filing and an administrator was appointed on yesterday.

A New York court has sent subpoenas to Etihad and ratings agency Fitch this week seeking a document at the centre of a battle over $1.2 billion in debt issued by the Abu Dhabi carrier and airlines it partly owned, according to legal documents reviewed by Reuters. Investors, including fixed-income specialist BlueBay Asset Management, are seeking access to a “debt assumption agreement” signed by Etihad and Alitalia, the Italian carrier, in 2016, before Alitalia went bankrupt. Etihad issued bonds in 2015 and 2016 through an Amsterdam-based special purpose vehicle, EA Partners (EAP), which then distributed the money to Etihad and other airlines, including Alitalia. According to EAP filings with the London stock exchange and a Fitch report in May 2017, Etihad agreed to cover the debt owed by Alitalia under the debt assumption agreement. The investors believe the document will help them recover part of the money they invested in the bonds and sought access to it in a lawsuit filed on June 16 with the U.S. District Court for the Southern District of New York. Judge P. Kevin Castel approved their request and subpoenas were hand delivered to registered agents of Fitch and Etihad in New York ordering them to disclose the debt agreement. They each have until July 7 to respond to the order or object.

German payments company Wirecard collapsed yesterday after disclosing a massive financial hole in its books, leaving creditors owed nearly $4 billion facing an almost complete wipeout, Reuters reported. The implosion of the fintech company comes less than two years after it won admission to Germany’s prestigious DAX stock index. Worth $28 billion at its peak, Wirecard becomes the first DAX company to go out of business. Wirecard’s sudden demise leaves creditors owed 3.5 billion euros ($3.9 billion), a source close to talks with creditors said. Of that amount, it has borrowed 1.75 billion euros from 15 banks and 500 million euros from bond investors. Shares were suspended for 60 minutes by the Frankfurt Stock Exchange before the announcement. They have now lost 98% since auditor EY refused to sign the 2019 accounts last week, forcing out long-time CEO Markus Braun.