Dartmouth furniture maker declared insolvent

Dartmouth furniture manufacturer Scanwood Canada Ltd. — a supplier of cabinets to Swedish retailer Ikea — was formally declared insolvent Wednesday by a Halifax court.

The company was placed in creditor protection and Green Hunt Wedlake was appointed to monitor Scanwood. The company is continuing as an on-going business.

"We now have a stay in place. We can focus on developing the plan to bring this company back to where it used to be and where it can be," said Bo Thorn, the chairman of Scanwood.

"All our stakeholders, we've been working with them very closely. We continue to do that. Ikea will continue to buy everything we produce."

One of the 248 employees at the Burnside Industrial Park plant said he's hopeful after getting court protection.

"Basically we're doing fine. This is something that is just unfortunate that happened along the way, so we'll see how we get out of this," said Stefan Hohm.

One of Scanwood's creditors, RBC Royal Bank, unexpectedly called a $2.1-million line of credit in January, which triggered the events leading to Wednesday's court order. The order protects Scanwood from creditors until March 3.

"This is something that makes you feel unease. But our job, my job is to meet with our employees and let them know it is business as usual, continue to work diligently," Thorn told CBC News outside the courtroom.

The four major creditors are RBC Royal Bank, the Province of Nova Scotia, Ikea and the Business Development Bank of Canada.

In March, Scanwood received a $4.75-million government loan that was supposed to help the company become more innovative and efficient. The money came from the cabinet-controlled Industrial Expansion Fund.

Secured creditors agreed to the order on Wednesday, which allows Scanwood time to come up with a proposal to go forward. Justice Heather Robertson granted the company's application for creditor protection.