DARTMOUTH, NOVA SCOTIA -- Scanwood Canada Ltd., a manufacturer of ready-to-assemble furniture for IKEA, shut down operations last month and is making arrangements to liquidate its assets, including machinery and inventories.

The company's financial troubles came to a head on April 18 when Canada's Supreme Court rejected Scanwood's request to extend its protection against creditors. The company went into receivership in February, at which time it received protection under the Companies’ Creditors Arrangement Act. At that time, Scanwood also received a $1 milliion loan from TCE Capital to aid its restructuring plan.

According to the Canadian Auto Workers (CAW), approximately 235 of its union members lost their jobs at Scanwood. The CWA said a bid by SBA Furniture Group of Lithuania to purchase Scanwood died because "workers at the company refused to accept further concessions."

Scanwood's contract with IKEA reportedly called for the delivery of 900,000 RTA chests of drawers per year. IKEA was the plant's only customer. CAW reported that the company owed approximately $24 million, including about $4.6 million to the province of Nova Scotia for a loan to buy automated equipment. Other reported large debts include the Business Development Bank, $4.9 million; Royal Bank of Canada, $2.1 million; and IKEA Supply AG, $3 million.

Scanwood was originally established as Swedwood by IKEA. In 2004, IKEA sold the operation to Tommy Holmer, past President and CEO of Swedwood Canada Ltd.

IKEA, the world's largest furniture retailer, has also operational challenges at its Swedwood operation in Danville, VA, where some workers have sought to unionize because of alleged unfair employee work practices.

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