Canadoil Forge: wages before fees, then two sales for $18.67 million

Canadoil Forge Ltd. made elbows, tees, reducers and caps, the parts "that connect sections of pipeline, primarily for the transportation of natural gas," in the words of the teaser FTI Consulting Canada Inc. sent to buyers in October 2025. Founded in 1982, the company worked from two neighbouring buildings in Bécancour, Québec, near a deep-water port, and had revenue of about $37.5 million in fiscal 2024, its last year of normal operations according to the teaser, per the Teaser, Oct. 20, 2025, pp. 1–2. About 100 employees worked in Québec, and U.S. customers were invoiced through CFC Canadoil, Inc., a related Texas company, per the Interim Receiver's Report, Aug. 27, 2025, paras. 7–11.

The plant stopped in August 2025. On the morning of August 29, Fiera's later application says, the company's counsel told Fiera that the directors and officers had resigned and that the company would not contest the receivership motions; by the end of that day's hearing the employees had all been laid off, per the Application for Appointment of Receiver, Oct. 9, 2025, paras. 6, 16, 20. What followed were competing motions from two secured lenders, a judgment from Justice Luc Morin that refused new interim financing and put unpaid wages ahead of the professionals' fee charge, two sales, a bankruptcy and, on August 7, 2026, a completed second distribution.

What the lenders said they found

Royal Bank of Canada, the operating lender, was owed about $12 million on a revolving facility secured by the receivables and inventory, per the Interim Receiver's Report, Aug. 27, 2025, para. 14. Two Fiera Private Debt funds held term loans, $20 million from Fund VI in 2023 and up to $10 million from Fund VII in 2024, the second advanced in two $5 million tranches for equipment. On September 18, 2025 they were owed $19,915,945.07 and $9,879,600.21, secured on the two buildings and all of the company's movables, per the Application for Appointment of Receiver, Oct. 9, 2025, paras. 32–39.

FTI came to the file as RBC's financial adviser in June 2025. Its August 27 report as proposed interim receiver said the borrowing base had left out $3,339,000 in source-deduction arrears, interest and penalties owed to the Canada Revenue Agency, and that CFC had credited and re-issued its U.S. invoices every month so that its receivables stayed current for the calculation, a practice FTI said a director, Giacomo Sozzi, confirmed to it on July 30, 2025. FTI put the borrowing base deficit at May 31, 2025 at $7.3 million "in a best-case scenario," per the Interim Receiver's Report, Aug. 27, 2025, paras. 17, 39, App. C and the Fifth Report, Feb. 20, 2026, para. 60. Asked about CFC's receivables, Mr. Sozzi told FTI that a fire in October 2024 had cut production and left customers with partial deliveries they would not pay for until their orders were complete. The report also notes a strike by unionized production staff, and revenue down from $37.5 million to $31.8 million in the year to January 31, 2025, per the Interim Receiver's Report, Aug. 27, 2025, paras. 16, 48(b), 56(b).

Fiera's application, affirmed on October 9 by Russell French, its managing director for special situations, names Mr. Sozzi as the company's president. On an August 14 site visit, it says, Fiera found 20 to 25 employees where the company had represented about 100, could identify by serial number only two of the 15 pieces of equipment financed by the first Fund VII tranche, and saw none of the second tranche's equipment; a company employee told them that advance had essentially gone to equipment supplier deposits. As a condition of those advances, the application says, the company had given Fiera a CRA letter showing a nil balance at December 10, 2024; the CRA's original, which Fiera received on August 28, 2025, showed $3,526,793.67 owing, "thus confirming that the CRA Confirmation Letter provided to Fiera had been altered to hide the existence of the CRA Arrears." It also says the company repaid advances to Mr. Sozzi of $7,092,686 in the year to January 31, 2025 and $1,769,634 afterward, without Fiera's consent, per the Application for Appointment of Receiver, Oct. 9, 2025, paras. 48(b)–(c), 51–54. These are Fiera's allegations, and the receiver's review was still open in July 2026.

Three motions, one officer

RBC's first application for an interim receiver, over Canadoil and CFC, was heard ex parte on August 18, 2025 and dismissed the next day because it had proceeded ex parte, according to Fiera. RBC refiled on August 21, and on August 27 Fiera filed its own motion, proposing Raymond Chabot Inc. On August 29 the court granted both applications and appointed FTI interim receiver, with a $300,000 administration charge, and in early September it let FTI borrow up to $400,000 from Fiera for conservatory measures, per the Application for Appointment of Receiver, Oct. 9, 2025, paras. 11–23 and the Sixth Report, July 21, 2026, paras. 3–6. FTI examined Mr. Sozzi, with counsel for both lenders, on September 15 and 16, per the Third Report, Sept. 25, 2025, para. 14(f).

Fiera then applied under s. 243 of the Bankruptcy and Insolvency Act to have Raymond Chabot appointed receiver, and with RBC's support widened the request to all of the company's property after Mr. Sozzi told the lenders that a bankruptcy could prejudice its permits, licences and contracts, per the Application for Appointment of Receiver, Oct. 9, 2025, paras. 26–29. The court dismissed that application on September 26, along with Fiera's request for more interim financing and a larger administration charge. Justice Morin later explained that the court "saw no good reasons in swapping the Court officer from FTI to Raymond Chabot Inc. … without there being unnecessary duplication of fees," per the Judgment, Oct. 15, 2025, paras. 2–3. The interim receivership was extended, but to October 14 rather than the October 29 Fiera had sought, per the Sixth Report, July 21, 2026, paras. 11–12.

"Nothing more, nothing less"

Fiera's second application, filed October 9, proposed FTI as receiver, a two-phase sale process to close by December 19, a $650,000 interim facility secured by a $780,000 charge ranking ahead of the Crown's deemed trusts, and a $75,000 administration charge. A receivership rather than a bankruptcy, it argued, would keep the permits needed to restart the plant, which both parties that had approached FTI about a purchase had stressed, per the Application for Appointment of Receiver, Oct. 9, 2025, paras. 3, 62–73.

On October 15, 2025, Justice Morin appointed FTI receiver, effective 12:01 a.m. on October 14, satisfied that "the choice of FTI rather than RCI will avoid duplication of fees." He let the sale process start before Fiera's prior-notice period under the Civil Code had run, relying on art. 2767 C.C.Q.: "The directors and officers have effectively abandoned the company. Operations have ceased abruptly," per the Judgment, Oct. 15, 2025, paras. 10–16, 71–72.

Fiera's own evidence, corroborated by the testimony of FTI's Martin Franco, suggested the collateral would not cover the secured debt, and Justice Morin refused the interim financing, finding it "more probable that both the Bank and the Fiera Entities will suffer significant losses and that therefore, the purpose of the Interim Financing is to minimize such losses, not to create any value for other stakeholders. As the Court pointed out before, this is a non-operational enforcement process. Nothing more, nothing less." About $3.4 million of deemed trust amounts and about $865,000 of wages were unpaid, and some of those amounts "may rank ahead of the Bank and the Fiera Entities' secured rights." Disclaiming any "general precedent against interim financing in situations involving underwater loans," he held that "Interim financing is not intended to compensate for a deficient collateral structure, nor to shift the burden of a secured creditor's risk onto other stakeholders," per the Judgment, Oct. 15, 2025, paras. 17–36.