Baffinland: what the noteholders got for standing down

The ice decides the schedule. Everything else in this case is negotiable.

Where the case stood

Nunavut Iron Ore, Inc., Baffinland Iron Mines Corporation and 12334992 Canada Inc. obtained an initial order under the CCAA on May 15, 2026, with a stay to May 25 extended to their affiliate Baffinland Iron Mines LP, and FTI Consulting Canada Inc. appointed monitor. The stay was extended to June 5 on May 25 by an amended and restated initial order that also raised the administration charge and the D&O charge — the latter set initially at $14 million, per Second Supplement to the Second Report of the Monitor, June 29, 2026, paras. 1–2 and Pre-Filing Report of the Proposed Monitor, May 14, 2026, para. 4(f).

What is being kept alive is the Mary River Mine on Baffin Island, and the reason the calendar is unforgiving is that everything the mine consumes for a year arrives by ship in a single window. The monitor's framing of the Debtors' need is operational, not legal: they need stability and funding to proceed immediately with procuring supplies for the upcoming Sealift Season, and those expenditures are what maintain going-concern operations at the mine, per Second Report of the Monitor, June 4, 2026, para. 9(a).

Among the things the monitor was already doing by early June: helping secure the Debtors' annual fuel supply for delivery during the sealift, which produced an arrangement with Kildair; attending meetings of an Operating Committee made up of representatives of Nunavut Iron Ore's two shareholders; and assisting communications with employees, key suppliers, government entities and the Qikiqtani Inuit Association and its affiliates, per Second Report, June 4, 2026, paras. 11(b)–(e).

There was also better news than anyone expected on the cash. Actual net cash flow for the two weeks to May 29 was positive $5.8 million against a forecast negative $12.6 million — an $18.4 million swing that left $21.2 million in the bank instead of $2.8 million. Almost all of it was timing: $11.3 million because offtake proceeds arrived a week early, and roughly $5.9 million because vendor orders, exploration and Steensby project spending were held back pending the finalisation of DIP financing terms, per Second Report, June 4, 2026, paras. 13–14.

That last clause is the case in miniature. The company's liquidity looked better precisely because it had stopped buying the things it needs.

The government's facility

The instrument at the centre of it is a DIP facility term sheet dated June 3, 2026 between Baffinland Iron Mines Corporation and Baffinland Iron Mines LP as borrowers, Nunavut Iron Ore and 12334992 Canada as guarantors, and His Majesty in Right of Canada, as represented by Export Development Canada, as lender.

The size is the headline: up to a maximum principal amount of $400 million, rising to a maximum of $475 million in what the term sheet calls a Finished Product Non-Funding Scenario, secured by a priority DIP charge over all the assets, property and undertakings of the Debtors. Of that, an initial $110 million in Bridge Advances was to be available during a four-week Bridge Period beginning on the date of the second amended and restated initial order, per Second Report, June 4, 2026, para. 3.

The Debtors and the monitor ran a DIP solicitation process to get there. It produced, in the monitor's words, "two viable Final DIP Proposals" and one that was not viable — and the monitor's assessment of the one chosen was that the facility was necessary and that "the terms of the DIP Financing Agreement are reasonable and within market parameters", per Second Report, June 4, 2026, para. 9(b).

Two viable proposals is exactly the number that produces a fight.

The cross-motion

On June 4, 2026 — the same day the monitor filed its second report for a hearing at which the Debtors intended to get the EDC facility approved — Oaktree Capital Management, L.P. and Hartree Partners, LP (the First Secured Lenders) and the Ad Hoc Committee of holders of the 8.750% senior secured notes due 2026 brought a joint cross-motion. They wanted the hearing adjourned, a litigation schedule set, and the Debtors authorised to enter their final DIP proposal instead, per Second Supplement, June 29, 2026, paras. 3–4 and Joint Cross-Motion Record, June 5, 2026.

Everyone filed. There are facta on the docket from the applicants, from the Ad Hoc Committee, and from Oaktree and Hartree, and written submissions from Export Development Canada and from the Energy & Minerals Group, per Factum of the Ad Hoc Committee, June 5, 2026 and Written Submissions of Export Development Canada, June 5, 2026.

The June 5 hearing did not decide anything. It was adjourned to June 10 on agreed terms among the Debtors, the Senior Secured Lenders, the DIP lender and the Energy and Minerals Group; the stay went to June 10 and the court granted a Sealift Supplier Charge, per Order (Stay Extension and ARIO Amendment), June 5, 2026 and Second Supplement, June 29, 2026, para. 5.

The bridge, and the fight it deferred

What Justice Steele did on June 10 was refuse to choose yet, and build a structure that made not choosing safe.

The second amended and restated initial order extended the stay all the way to August 28, 2026, authorised payment of pre-filing amounts to certain critical suppliers with the monitor's consent, and approved the EDC facility only for the Bridge Period — until June 30, 2026, when the parties would return for a de novo hearing on whether the government's DIP or the Senior Secured Lenders' DIP should be approved. Her endorsement of June 11 gave the Senior Secured Lenders certain protections during the bridge, per Second Amended and Restated Initial Order, June 11, 2026 and Second Supplement, June 29, 2026, paras. 7–8.

The monitor had recommended exactly that design a week earlier, and its reasoning is the cleanest statement of why bridge DIPs exist: the Bridge Period preserves the right to challenge continuation of the facility beyond it, so no stakeholder is prejudiced by approving it now, "should the Court ultimately determine that a different DIP facility be approved at a later date", per Second Report, June 4, 2026, para. 9(c).

The mine got its money. The question of whose money it would ultimately be got a trial date.

Then the parties litigated. Under an agreed timetable the Debtors, the Senior Secured Lenders and the DIP lender exchanged affidavits and began cross-examinations — the record carries affidavits from Ashley Glen and Jason Cox filed June 19 alongside a 27-megabyte joint responding and cross-motion record from the senior secured lenders, per Second Supplement, June 29, 2026, para. 10 and Joint Responding and Cross-Motion Record of the Senior Secured Lenders, June 19, 2026.

It stopped mid-stride. On June 22 the Senior Secured Lenders and the DIP lender reached a preliminary settlement and shared it with the Debtors and the monitor the same day. At case management conferences on June 23 and June 24, Justice Steele paused the remaining steps in the litigation timetable — the rest of the cross-examinations, the monitor's report, the exchange of facta — effective immediately, so the parties could consider it. Anything left unresolved would be dealt with on June 30, per Second Supplement, June 29, 2026, paras. 11–12, 15–16.

Final terms were agreed on June 26 — a term sheet titled "Settlement of DIP Financing Litigation" and a confidential side letter, both attached to the affidavit of Alison Babbitt sworn June 27, per Affidavit of Alison Babbitt, June 27, 2026 and Joint Aide Memoire of the Senior Secured Lenders, EDC and the Debtors.

What was actually traded

The Senior Secured Lenders agreed to support approval of the EDC facility. In exchange they received consent, collaboration, information and participation rights in the proceeding. Not a repricing, not a share of the facility — governance, per Second Supplement, June 29, 2026, para. 17.

Specifically, per Second Supplement, June 29, 2026, para. 18:

• Consent rights over discretionary growth spending — any spending of Excess Exploration and Expansion Expenses as defined in the facility requires their consent, unless the court approves it instead.
• A hand on who runs the company. A Transaction Advisor and a Chief Restructuring Officer are to be selected in a process conducted by the monitor, which schedules all interviews, from a candidate list set out in the side letter, and selected with the support of both the DIP lender and the Senior Secured Lenders. The Debtors may interview candidates in the monitor's presence and give the monitor their views — and every party keeps the right to object in court, including "the unfettered right of the Debtors to object to the Transaction Advisor or Chief Restructuring Officer selected". The monitor is careful to note in a footnote that this unfettered right runs only to the identity of the person chosen.
• Participation rights in the development of a sale and investment solicitation process and its terms, in budgets and cash flow forecasts, and in payments to related parties or insiders and binding sealift procurement commitments related to the Steensby Expansion.
• Specific information rights.
• Payment of the reasonable fees and disbursements of the professional advisers retained by the Senior Secured Lenders and the DIP lender.

Read as a whole, the lenders swapped a challenge to the money for a seat at every decision the money will fund — most importantly the sale process and the identity of the executive who will run it.

The candidate names stay sealed. The monitor asked that the side letter remain confidential because "The disclosure of these details could negatively affect the process to be undertaken to select a Chief Restructuring Officer and Transaction Advisor" that the monitor will oversee, along with the development of the SISP, per Second Supplement, June 29, 2026, para. 17 n.1.

The monitor's own recommendation for a CRO predates the settlement: it had told the court on June 4 that, based on stakeholder feedback and its own observations, "the Monitor recommends that an experienced Chief Restructuring Officer" be appointed, per Second Report, June 4, 2026, para. 9(e).

June 30

Madam Justice Steele approved the settlement on the terms of the term sheet and the confidential side letter, finding them "fair, reasonable and appropriate and are hereby approved in their entirety", and authorising and directing the settlement parties and the monitor to perform them. The settlement parties are named: the Debtors, Export Development Canada, Oaktree, Hartree, and — appearing in the record at this point — Polen Capital Credit, LLC and Brigade Capital Management LP. The order is signed digitally at 10:56 a.m., per Settlement Approval Order, June 30, 2026, para. 1.

Four items stay under seal: a confidential exhibit to Celeste van Tonder's June 4 affidavit, the confidential version of David Nicoll's June 14 affidavit, a confidential exhibit to Marcelo Messer's June 15 affidavit, and the side letter itself. Public redacted versions remain public and go on Case Center; nobody may disseminate the confidential materials beyond the settlement parties and their counsel, per Settlement Approval Order, June 30, 2026, paras. 2–4.

The order also carries the standard request for the aid and recognition of any court in Canada or the United States, and authorises the monitor to act as representative abroad, per Settlement Approval Order, June 30, 2026, paras. 5–6.

What the monitor said it buys

The monitor's endorsement of the deal is unusually warm for the genre. It is "pleased with the cooperation" of the Debtors, the DIP lender and the Senior Secured Lenders; believes the settlement is in the best interests of all stakeholders; and says it "eliminates the need for the continuation of costly and distracting litigation in respect of the EDC DIP Facility". It follows the spirit of the June 11 endorsement and "strikes an appropriate balance between the Litigation Parties", per Second Supplement, June 29, 2026, para. 19.

The operational justification is the one that matters on Baffin Island. Approving the facility on a final basis together with the settlement gives the Debtors certainty and finality, and — the monitor's phrase — will "convey stability to the Debtors' employees, suppliers, customers and other stakeholders in preparation for the Sealift Season", per Second Supplement, June 29, 2026, para. 20.

Next

The monitor's list of what it turns to now is the shape of the second half of this proceeding: supplier engagement for the critical sealift season; preparations to launch a SISP; identifying a Transaction Advisor and an experienced CRO; and helping the Debtors finalise and seek approval of a Key Employee Retention Plan, per Second Supplement, June 29, 2026, para. 21.

The stay runs to August 28. A $400 million government facility is now unopposed, a sale process is being built, and the two creditor groups that spent June trying to displace each other will choose the chief restructuring officer together. The ships, meanwhile, sail when the ice lets them.