Canstar Restorations: an RVO, and an employee clause rewritten on hearing day

Section 7.7 of the agreement under which Premium Restoration Ltd. takes over Canstar Restorations is headed "Employees," and it was rewritten on the day the receiver's application to approve the deal came on for hearing. In the agreement of September 15, it dealt in three steps with the transition employees, the staff a residual company is to employ for 90 days under a transition services agreement while the debtors decide whether to hire them. Their employment would, "pursuant to the RVO," be "i) transferred to ResidualCo as an Excluded Contract, ii) thereafter terminated by ResidualCo; and iii) then immediately deemed re-hired by ResidualCo on substantially the same terms and conditions as their existing employment agreements," other than the term, per the Pre-Filing Report of the Proposed Receiver, Sept. 25, 2026, s. 6.0, para. 2(p) and App. "E", s. 7.7.

The second amending agreement, dated October 8, deletes that section. In its place, the transition employees' employment is to "be transferred to and assumed by ResidualCo as an Excluded Contract on the same terms and conditions as their existing employment agreements with the Debtors immediately prior to Closing (other than the term)." The copy before the court was unexecuted, exhibited to an affidavit sworn that day by a legal assistant at Fasken Martineau DuMoulin LLP, the receiver's counsel, per the Affidavit #2 of Jordan Beaulieu, Oct. 8, 2026, paras. 1–2, Ex. "A", s. 2.1.

On October 9, Justice Stephens of the Supreme Court of British Columbia approved the transaction, the agreement as amended on September 24 and October 8, and the transition services agreement. The order records the receiver's application as heard on October 8 and October 9, with judgment reserved to October 9. No reasons or endorsement are in the record. The receivership began on the Bank of Montreal's petition on September 28, as reported here on September 30, and this is the order that, once AlixPartners Restructuring, Inc. delivers its receiver's certificate, takes Canstar Restorations Limited Partnership, Canstar Restorations GP Inc. and L.U.N.A Restorations Inc., together the Canstar Group, out of it, per the Transaction Approval and Reverse Vesting Order, Oct. 9, 2026, preamble and paras. 3, 10(l).

Nine days in receivership

In its First Report, dated October 7, the receiver wrote that its case for approving the deal quickly "has been validated by the response to these proceedings from key stakeholder groups." In its account, several customers had advised that they had deferred contracting the debtors for new projects pending court approval; vendors had been hesitant to keep working on active projects, unclear how their "pre-filing obligations will be addressed following closing"; and employees "require certainty concerning terms of their employment from the Purchaser," per the First Report of the Receiver, Oct. 7, 2026, s. 2.0, para. 8.

A number of trades and subcontractors in Alberta and Saskatchewan, the receiver reported, had taken the position that the September 28 order, made by a British Columbia court and naming only the BC Builders Lien Act, did not stop them registering liens in their own provinces. The threatened liens related to work on properties owned by the debtors' customers, and as of October 2 the receiver was not aware of any that had been registered, per the Second Supplement to the Pre-Filing Report, Oct. 2, 2026, s. 2.0, paras. 3–5. BMO's notice of application that day put the omission down to "inadvertence in drafting," per the Notice of Application, Oct. 2, 2026, Part 2, para. 4. On that application, made without notice under Rule 13-1(17) of the Supreme Court Civil Rules and s. 187(5) of the Bankruptcy and Insolvency Act, Justice Stephens replaced paragraph 8 of the receivership order the same day. Claims under Alberta's Prompt Payment and Construction Lien Act and Saskatchewan's The Builders' Lien Act are now stayed with those under the BC statute, and lien claims that would otherwise become barred are "tolled, extended, and preserved" during the stay, per the Order Made After Application, Oct. 2, 2026, preamble and para. 1.

As of October 7 the receiver was not aware of any stakeholder opposing the transaction, and it reported that the parties were working cooperatively to close on October 9 if the court approved the sale on October 8, per the First Report, Oct. 7, 2026, s. 2.0, para. 9 and s. 4.0, para. 1.

The closing, in twelve steps

The order sets the closing out as a numbered sequence, deemed to run from the closing effective time once the receiver delivers its certificate. Premium first pays the purchase price to the receiver, the excluded employees are terminated, and the Canstar Group's directors are deemed to resign and the new directors named in the agreement deemed appointed. Fourth, the excluded assets vest in 1608083 BC Ltd., the company the order calls ResidualCo, and they include, "for greater certainty," the purchase price. The transition employees and the transition leases follow. Seventh and eighth, every claim and encumbrance against the group other than the retained liabilities and permitted encumbrances vests in ResidualCo and becomes its obligation by novation, and the group and its property are "forever released and discharged" from them, per the RVO, Oct. 9, 2026, para. 10(a)–(h).

Security registrations against the group, other than those for retained liabilities and including those Schedule "C" lists for BMO and for FCP Canstar Holdco Inc. as security agent, are then discharged as against it and attach instead to the excluded assets with the same priority. Only after that are new shares of the general partner and of L.U.N.A Restorations Inc., and new units of the partnership, issued to Premium or as it directs. The old shares and partnership interest are cancelled "without any liability, payment or other compensation," the general partner's own interest in the partnership excepted. Last, the receivership ends for the Canstar Group, ResidualCo becomes the sole respondent under an amended style of cause, and AlixPartners becomes ResidualCo's receiver and manager, with the receivership's charges attaching to ResidualCo's assets, per the RVO, Oct. 9, 2026, para. 10(i)–(l) and Sched. "C".

A creditor whose claim or encumbrance is not a retained liability has, from closing, no claim against the group, its property or Premium, but "an equivalent Claim or Encumbrance" against ResidualCo with the same priority, and nothing in the order "limits, lessens, modifies (other than by change in debtor) or extinguishes" it, per the RVO, Oct. 9, 2026, para. 12. Among the liabilities that stay with the business, in the receiver's description, are those owing to trades and operating vendors engaged on active projects. The receiver's service list left out the debtors' approximately 650 vendors or trades. Serving them all, in its view, would have been impracticable and unnecessary, because a payable on an active job site is a retained liability, and an aged payable on an inactive one keeps the same priority against the net sale proceeds held by ResidualCo that it had against the debtors, per the First Report, Oct. 7, 2026, s. 2.0, para. 3(a) and s. 3.0, para. 2.

The transition employees

Under the order, each person the purchaser identifies as a transition employee "shall automatically become an employee of ResidualCo." Each employment agreement is deemed transferred to and assumed by ResidualCo "on the same terms and conditions without modification, except as to the term," which becomes 90 days from closing unless the employee and ResidualCo agree otherwise in writing. All of it applies "notwithstanding any applicable law, contract, collective agreement, policy, plan, or other restriction whatsoever," and without anyone's consent, per the RVO, Oct. 9, 2026, para. 10(e). In the form of order attached to the agreement in September, the same paragraph also said that each transition employee "shall have their employment with the Canstar Group terminated," per the Pre-Filing Report, Sept. 25, 2026, App. "E", Sched. 1.1(sss), para. 10(e)(i). The entered order does not contain those words.