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).