Chinook Farms: the source deductions kept growing

Chinook Farms Innovations Inc. sells dairy equipment, supplies and services to farm operations in Alberta, Saskatchewan and British Columbia. It has been doing it long enough that the security behind its bank debt includes a general security agreement with a floating charge on land dated January 15, 2008, and a collateral mortgage from January 2013 over five and a third acres, per Affidavit of Jay Dee Hall, sworn August 4, 2026, paras. 7, 24.

On August 12, 2026, Justice Macklin appointed GlassRatner Restructuring Inc. receiver and manager of Chinook, its parent PMI Corp., and Pro-Line Manufacturing Inc., on the application of the Royal Bank of Canada under s. 243(1) of the BIA.

The group, and the guarantees running between it

The structure is small and tightly cross-tied. Chinook is the operating company; its sole voting shareholder is PMI, which is a holding company; Pro-Line Manufacturing Inc. sits alongside them, per Affidavit of Jay Dee Hall, August 4, 2026, paras. 7–8.

RBC lent to Chinook under a credit agreement dated August 4, 2022, subsequently amended by a series of letters running from September 2022 through late 2023. It lent separately to PMI under a credit agreement of April 18, 2024, renewed twice — a $5,000 revolving demand facility, a revolving demand facility by way of letters of guarantee of $1,531,412.13 at 6.54%, a fixed-rate non-revolving term loan of $1,144,936.59 at 5.56%, and a credit card capped at $25,000, per Affidavit of Jay Dee Hall, August 4, 2026, paras. 10, 18.

Each company guarantees the others, in limited amounts that have accumulated over more than a decade. PMI guarantees Chinook's debt to $3,900,000, and Pro-Line does the same. Chinook guarantees PMI's to $3,000,000. Pro-Line's guarantees of PMI run to $855,000 under a document from November 2012 and $4,350,000 under one from April 2013. Every one of them is payable on demand, and none requires RBC to exhaust its recourse elsewhere first, per Affidavit of Jay Dee Hall, August 4, 2026, paras. 14–15, 22.

RBC's searches put it first-ranking in the Alberta Personal Property Registry against Chinook's present and after-acquired property, per Affidavit of Jay Dee Hall, August 4, 2026, para. 17.

What the statements showed

The financial position is set out from the debtors' own statements, and it is not ambiguous.

Chinook's assets fell from $9,586,985 in 2024 to $8,960,726 in 2025, while its liabilities rose from $14,371,755 to $14,909,249. Sales fell from $16,434,197 to $13,889,589. The 2024 year closed with a net loss of $540; 2025 closed with a net loss of $2,548,978. Retained earnings went from negative $2,548,978 to negative $4,971,522, and net book value from $1,159,443 to $872,997, per Affidavit of Jay Dee Hall, August 4, 2026, para. 36.

PMI is steadier and much smaller in what it does: revenues of $284,000 in 2024 and $288,000 in 2025, losses of $41,374 and $26,534, assets of $5,757,338 against liabilities of $3,017,483 at the 2025 year end, per Affidavit of Jay Dee Hall, August 4, 2026, para. 36.

On the combined statements, liabilities exceeded assets in 2025 across the group, the companies were making losses year over year, and net book value was declining, per Affidavit of Jay Dee Hall, August 4, 2026, paras. 35–36.

The defaults were mostly silence

The covenant breach itself dates back years: the debtors failed to meet the debt service coverage ratio covenant beginning in 2023.

What accumulated after that was an absence of information. Chinook did not provide financial statements for the 2025 financial year by December 31, 2025. Combined statements for the group and a former related entity, Pro-Line Manufacturing (Sask) Inc. — since dissolved — were not provided by the same date. Monthly margin reporting stopped after April 30, 2025. Monthly borrowing limit certificates were not delivered at all, per Affidavit of Jay Dee Hall, August 4, 2026, para. 32.