Baffinland: who decides the sale process

Since November 2020, the company that owns the Mary River iron mine has been run under a unanimous shareholders' agreement containing this clause: every member of the operating committee that holds the directors' powers may act "in the best interest of its appointing Shareholder without regard to duties or obligations that would otherwise be applicable." On September 16, 2026, the shareholders switched that clause off for as long as the CCAA proceeding lasts. Under the same instrument, a committee member with a conflict now leaves the room and an independent member votes in that member's place, per the Motion Record (SISP Order), Sept. 17, 2026, Ex. K, Independence Mandate, ss. 1(e), 2(f), 4(a).

The next day Baffinland's debtors filed their motion to approve a sale and investment solicitation process, returnable September 24. The acting chief executive of Baffinland Iron Mines Corporation, who also sits on the operating committee, swore the supporting affidavit. He calls the SISP substantially settled, in a form the chief restructuring officer could recommend "other than with respect to ultimate decision-making authority", per the Waheed Affidavit, Sept. 17, 2026, para. 34. The unsettled term is who picks the winning bid. The rest of the case since the June 30 settlement, reported here that day, is in effect the build-up to that question.

A CRO and a banker, both chosen by the lenders

Under the June settlement the lenders chose both advisers from a sealed list, in selections the monitor ran. It interviewed the CRO candidates on July 2. On July 8 Export Development Canada, as DIP lender, and the senior secured lenders told it they had unanimously chosen BlueTree Advisors Inc., with William E. Aziz. The monitor passed that on to the operating committee on July 9, per the Third Report, July 26, 2026, paras. 31, 37–38. The engagement pays a work fee of US$100,000 a month for at least three months and a US$500,000 success fee on any transaction. A tiered fee comes on top only if the senior secured debt is paid in full in cash at closing: US$1.0 million, then 0.5% of the next US$250 million of proceeds, 0.25% of the next US$500 million and 0.125% beyond that, per the Third Report, July 26, 2026, para. 63 and n. 8.

Madam Justice Steele approved the appointment on July 29 without objection. She noted that Mr. Aziz had been CRO in Walter Energy Canada and JTI-Macdonald, and that the debtors run "a large-scale remote Arctic mining operation with about 1200 employees", per the Endorsement of Justice Steele, July 29, 2026, paras. 2, 9, 11. The CRO's fees, up to US$1,000,000, rank first alongside the US$5 million administration charge, and the tiered success fee ranks last, behind the senior secured lenders' own security. The order also let the CRO sign non-disclosure agreements and arrange site visits before any SISP existed, because the window for helicopter tours of the mine and the proposed Steensby rail route closes with the weather, per the CRO Appointment Order, July 29, 2026, paras. 11–14 and the Third Report, para. 62.

The mandate schedule to BlueTree's engagement letter is where the September dispute starts. On the SISP, the CRO is to advise and make recommendations to the operating committee, give it updates, and help with NDAs and the banker's engagement. The last item is a residual clause: "such other services as may be needed … as determined by the CRO, in consultation with the Monitor and the Operating Committee", per the Motion Record (SISP Order), Ex. H, CRO Mandate, items (b)–(g), (o).

For the transaction advisor, two of the candidates named in the sealed side letter declined to interview, so the monitor added a candidate. The lenders then chose Morgan Stanley Canada Limited, and the operating committee agreed, per the Fourth Report, Aug. 25, 2026, paras. 8(d) n. 1, 34. The fee amounts are sealed. The public terms show a structure: a transaction in which the senior secured lenders end up with 50.1% or more of the company earns a reduced fixed fee. The full fee applies only if a phase-two bid that the CRO and the monitor consider actionable was on the table and the lenders took the company anyway, per the Fourth Report, para. 39 n. 5 and the Aziz Affidavit, Aug. 23, 2026, para. 31(c). The omnibus order of August 27 approved the engagement and sealed the unredacted letter. It added the advisor's two charges, which made the priority list six places long, and extended the stay to December 11, 2026, per the Omnibus Order, Aug. 27, 2026, paras. 3–4, 8, 10–11.

The sealift, the offtake and the draw

Operations went on while the advisers were being hired. As of August 25, the first of three fuel vessels had discharged on August 12, the second supply ship was due out of Valleyfield on September 20, and about 1.6 million tonnes of ore had been shipped. The monitor put that at 40% of the season's volume, on roughly 48 ships, with the last departure expected in early October, per the Fourth Report, Aug. 25, 2026, para. 18.

The four weeks to August 14 closed with a net cash outflow of US$86.7 million against a forecast of US$47.7 million. The monitor attributes most of the US$39.0 million gap to timing: two fuel vessels were paid for in that period instead of the periods around it. The permanent part includes US$2.4 million of professional fees over budget, in part the senior secured lenders' own advisers, whom the DIP settlement has the debtors pay. By August 14, US$179.6 million had been drawn on the EDC facility. The August forecast adds another US$95.7 million by December 11 and ends the period with US$281.1 million outstanding, per the Fourth Report, paras. 20–21, 23–24.

The mine's offtake arrangement with IRH Global Trading Ltd., which the monitor calls the debtors' primary source of operating cash flow, expires on October 31, 2026. The monitor wrote to five potential offtakers on July 30, IRH among them. All five said they were interested, and it had received "a number of" non-binding term sheets by August 14, per the Fourth Report, paras. 27–31.

Two waivers

The DIP loan agreement required a SISP order within 60 days of the June 11 amended and restated initial order, which meant by August 10. The debtors missed that date. The first amendment and waiver, dated as of August 11, excused the default on four conditions: a SISP order by August 27, a banker's engagement letter by August 14, an NDA distributed by August 21, and site visits by September 30. Any missed condition would itself be an event of default, per the Motion Record (SISP Order), Ex. I, First Amendment and Waiver, ss. 2–3. The August 27 date was missed as well. The second amendment and waiver, dated as of August 27 and signed for every debtor by the CRO, moves the deadline to September 30, 2026, per the Motion Record (SISP Order), Ex. J, Second Amendment and Waiver, s. 2.