5 Star: suits, badges and a bankruptcy to reorder the Crown's claims

The inventory at 123 Cree Road in Sherwood Park, Alberta was of two kinds that do not sit well together in a liquidation. Most of it was formal wear: rental suit sets, "a significant number of formal men's suits," retail goods. The rest belonged to the second line of the business, supplying uniforms to local law enforcement and other agencies, and some of that could not be sold to just anyone. The receiver's first report describes "Restricted Sale Property" as items "that can only be sold to qualifying personnel (such as law enforcement personnel)" — chiefly badges, patches, accessories and restricted uniform clothing — alongside third-party property that customers had prepaid for and left on the premises, per the First Receiver's Report, June 29, 2026, paras. 3–4, 13, 21.

Two companies stood behind the counter. 5 Star Services and Products Inc. ran the suit rental, retail and uniform business; 5 Star Operations Holding Ltd. owned the building and the 1.81 acres under it, and leased them to the operating company. Two individuals were the directors and equal shareholders of the holding company; one of them was the sole director and shareholder of the operating company, per the First Receiver's Report, June 29, 2026, paras. 4–5 and the Affidavit of John Hermann, Jan. 2, 2026, paras. 9, 26.

Since March 13, 2026 both have been in receivership in the Court of King's Bench of Alberta at Edmonton (file 2503 25728), with Ernst & Young Inc. as receiver and manager. On August 19, on the application of Bank of Montreal, Justice G. Dunlop adjudged both companies bankrupt, and BMO's bench brief says why the bank wanted that: bankruptcy "will have the effect of reversing the priority" of the companies' liabilities to the Canada Revenue Agency "and will improve BMO's prospects of recovering its secured debt," per the Bench Brief of Bank of Montreal, June 25, 2026, para. 35.

A consent order, held in reserve

BMO's loans date from January 2022. Per the first affidavit of John Hermann, sworn for the bank on January 2, 2026, the holding company owed $2,076,679.12 on one loan at December 30, 2025, and the operating company $436,441.36 and $316,656.63 on two others, all at prime plus 3.00%. Each company guaranteed the other's debt. Three individuals gave personal guarantees, capped at $2,320,000 for the holding company's debt and $1,160,000 for the operating company's. The holding company's debt was secured by a mortgage on the Cree Road lands dated January 26, 2022, an assignment of rents and a general security agreement, per the Affidavit of John Hermann, Jan. 2, 2026, paras. 10–26.

The bank demanded payment on or about September 12, 2025. On October 20 the two companies and one of the directors signed a forbearance agreement running to November 28, 2025, and with it a consent receivership order BMO could file on default. The affiant also deposes that the CRA issued an enhanced requirement to pay against the operating company in August 2025, for up to $1,062,767.09, and cancelled it that September, and that by BMO's review of its records and the company's statements the operating company still owed the CRA at least $1,050,000 in source deduction arrears and $250,000 in unpaid GST. "BMO's patience has now been exhausted," the affidavit concludes, per the Affidavit of John Hermann, Jan. 2, 2026, paras. 35–40, 44–45, 53.

The owners' answer was to sell the building. A director of the holding company, a real estate broker whose firm took the listing, swore on January 8 that the property had gone on the market on December 31, 2025 at an asking price of $4,000,000, about $130 a square foot, which she described as "well below both Sherwood Park and Edmonton pricing metrics," with multiple showings booked, per the Affidavit, Jan. 8, 2026, paras. 4, 8, 11–12. BMO responded with an independent appraisal of its own and asked that it be sealed, arguing that publishing the appraised value could affect whatever price the lands eventually fetched, per the Supplemental Brief of Law for Sealing Order, Jan. 12, 2026, paras. 2–6, 15.

On January 13 Madam Justice Burns sealed the appraisal and, at the request of counsel for the defendants, adjourned the receivership application to the week of March 9. BMO came back on March 2 saying that nothing had changed: the debt now exceeded $2,814,636.93, no refinancing had been shown, no offer had been produced, and no substantive listing update had been given since February 10, per the Supplemental Brief of Law of Bank of Montreal, Mar. 2, 2026, paras. 3–5, 12–13, 21.

Justice J.S. Little granted the consent receivership order on March 12, under s. 243(1) of the BIA, s. 13(2) of the Judicature Act, s. 49 of the Law of Property Act and s. 65(7) of the Personal Property Security Act, with a receiver's charge of $250,000 and borrowing authority of $200,000. The order also carried a condition: it was "stayed and shall be of no force or effect" until a purchaser of the lands, 69 Echo Ltd., defaulted under its agreement with the holding company, the first trigger being a deposit due on or before March 13, per the Consent Receivership Order, Mar. 12, 2026, paras. 2, 4, 20, 23. The purchaser did not pay the deposit, and the receivership began on March 13, per the First Receiver's Report, June 29, 2026, para. 1.

Selling a uniform shop in wedding season

EY did not run the business. It changed the locks, froze the bank accounts, terminated the staff and rehired the senior accountant and a few salespeople to sort out whose property was whose. Those salespeople called every customer with a suit rental booked through the end of July 2026, told them of the receivership, and offered them the rental at a clearance price, per the First Receiver's Report, June 29, 2026, paras. 11–24.

The invitation for offers went out on April 1 to more than 89 strategic investors, competitors and liquidators, and was advertised in the Globe and Mail and the Edmonton Sun, with a May 1 deadline. It listed "thousands of pieces of clothing and accessories," sewing machines, washers and dryers, two vehicles, office furniture, and the building, per the Invitation for Offers, Mar. 31, 2026, p. 2 and the First Receiver's Report, June 29, 2026, paras. 49–52. Three auction proposals came in for the chattels. The auctioneers advised that with so many formal men's suits the sale should run "as soon as possible to capitalize on the graduation and wedding seasons," and EY took a straight auction from McDougall Auctioneers, which it expected to stay under the receivership order's sale thresholds of $50,000 for a single transaction and $250,000 in aggregate, per the First Receiver's Report, June 29, 2026, paras. 58–60.

The auction was held on June 18. The day before, a party familiar with restricted uniforms warned the receiver that some restricted property was in the lots and could not be sold to the public "due to risk of potential impersonation of law enforcement officials." The mixed lots came out of the sale, per the First Receiver's Report, June 29, 2026, paras. 61–64. By August the receiver had re-engaged one of the salespeople as a contractor, contacted the appropriate authorities, held pickups mostly on July 17 and 18, and had what was left destroyed by Enviro Shred; "No Restricted Sale Property remains." McDougall's preliminary gross results were $227,165.00, and with $55,944.52 in direct inventory sales the receiver thought the $250,000 aggregate threshold was "likely exceeded," per the Supplement to the Receiver's First Report, Aug. 10, 2026, paras. 13–21.