Darwynn: the stay lifts on everyone but the company

Darwynn Ltd. picked and packed other companies' orders out of four leased warehouses — Surrey, Calgary, Toronto and Saint-Laurent — with eleven more partner warehouses in Canada and the United States on the same network, and roughly 74 people on the payroll. Its principal assets were intangible, and its own financial statements record losses of approximately $6.819 million in 2023, $5.937 million in 2024 and $3.837 million in 2025. Management told Ernst & Young Inc. that a dispute among the major shareholders had impeded access to financing, that certain carriers paused services late in 2025, and that the loss of a significant customer that November took monthly operating losses from about $65,000 in October to about $540,000 in December, per the Monitor's Pre-filing Report, Feb. 25, 2026, paras. 20–25, 30–31.

On February 26, 2026, Justice Myers granted an initial order under the CCAA on the application of 2379338 Ontario Inc. — the numbered company of Darwynn's majority shareholder, Guoyin (Wynn) Xie, holding a general security agreement over all of Darwynn's present and after-acquired personal property — with Darwynn itself as respondent. The order stayed proceedings to March 6, granted a $250,000 administration charge, and authorized a $2 million debtor-in-possession facility from the same applicant, $750,000 of it advanceable in the first ten days, per the Initial Order, Feb. 26, 2026, paras. 11, 26–27.

Seven months on, at a case conference on September 18, 2026, the same judge lifted that stay over the shareholder litigation it had frozen — as against the directors, the shareholders and their companies, though not as against Darwynn — converted two oppression applications into actions, ended his own case management, and signed an order extending the stay so the monitor can bring the motion that ends the proceeding, per the Endorsement of Myers J., Sept. 18, 2026, paras. 1, 6, 18, 26.

The lender, the landlord and the buyer were one man's company

"Before me today is a creditor-initiated CCAA proceeding in respect of Darwynn Ltd.," the first-day endorsement begins, alongside scheduling in the pre-existing cross-applications for oppression. The board of four — Mr. Xie, the chief executive officer Mohammad Reza Bafandeh, and the minority directors Yan (Randy) Liu and Lisha Gong — had been deadlocked since July 2025, while the company, with more than 70 employees and 200 customers waiting on real-time delivery, needed funding: "It cannot pay its expenses next week without an infusion of almost $750,000 in cash," per the Endorsement of Myers J., Mar. 2, 2026, paras. 1, 6, 8, 22.

The applicant's place in the capital structure was not the only one Mr. Xie occupied. "He is the company's majority shareholder, principal funder, secured creditor, and most significant landlord," the endorsement records, and he or his companies had guaranteed Darwynn's warehouse leases across the country. Justice Myers granted the order while marking its limits — "granting this application is not any approval of the conduct of Mr. Xie or related parties that is the subject matter of the oppression remedy against them" — and first required the term sheet amended so that a lender who was also guarantor and likely bidder could not veto acts the court itself approved, per the Endorsement of Myers J., Mar. 2, 2026, paras. 3, 18, 34.

Management's schedule of liabilities as at February 20, 2026 came to $5,551,047, including $2,678,813 of accounts payable, $531,233 owing to the applicant and $1,771,370 owing to another Xie company, Prime Nutrisource Inc.; a $2,697,945 convertible promissory note held by NMN Group Ltd. sat outside it, debt or equity being itself in dispute, per the Monitor's Pre-filing Report, Feb. 25, 2026, para. 26.

At the March 6 comeback the minority directors argued that, stripped of every liability not yet vouched to their satisfaction, the debt cleared the statutory threshold by $16,000. "First, $5,016,000 is more than $5 million. That is all that is required," Justice Myers answered, per the Endorsement of Myers J., Mar. 6, 2026, paras. 5–7. He raised the administration charge to $500,000, extended the stay to April 27, and directed the monitor — not management — to develop the sale process, because "Management is conflicted not only due to the oppression litigation; but also due to the fact that Mr. Xie is the DIP lender and the likely stalking horse buyer of the business." He also refused to let the monitor screen the minority directors' document requests for reasonableness: "transparency is part of the price of CCAA protection," per the Endorsement of Myers J., Mar. 6, 2026, paras. 8, 14 and the ARIO, Mar. 6, 2026, paras. 14, 22(g), 29.

Fifty-nine approaches, three confidentiality agreements, no bid

The April 10 order approved a sale and investment solicitation process run by the monitor, with the applicant's April 3 stalking horse agreement as the opening bid, a $150,000 break fee payable if the stalking horse was not the successful bidder, and Phase 1 and Phase 2 deadlines of May 6 and May 19, per the SISP Approval Order, Apr. 10, 2026, paras. 3, 6, 8, Sch. "A", para. 17. Two further orders that day extended the stay to June 30 and lifted the DIP facility to $3 million, per the Third Report, May 25, 2026, para. 5. Justice Myers told counsel for both camps in chambers afterwards that if Mr. Xie wanted a clean corporate slate and the minority a return on equity from an insolvent company, "they need to settle at the shareholder level before the SISP concludes," per the Endorsement of Myers J., Apr. 10, 2026, para. 9.

The monitor published notice in The Globe and Mail on April 21 and approached 59 potential interested parties, 24 of them strategic and 35 financial. Three signed confidentiality agreements: one declined after reading the confidential information memorandum, one never identified itself, one declined after the memorandum and the data room. No notice of intention to bid arrived by the extended Phase 1 deadline of May 11, so the monitor dispensed with Phase 2 that day and designated the stalking horse the successful bidder, per the Third Report, May 25, 2026, paras. 42–50.

The asset purchase agreement carries a purchase price of $7.5 million plus assumed liabilities, satisfied by a credit bid equal to the outstanding DIP and pre-filing indebtedness owing to the applicant, cash for the balance and for any excess of priority payables over it, and the assumption of those liabilities. On a fully drawn facility the monitor put the cash proceeds at about $3.9 million before unpaid restructuring costs secured by the administration charge, and its counsel reported the applicant's security valid and enforceable, per the Third Report, May 25, 2026, paras. 56, 61, 64.

The judge who would not sign in June

The sale approval motion was argued on June 4, 2026, and Justice Myers reserved. "I am not yet satisfied that the proposed transaction is presented in circumstances that represent an appropriate outcome under the CCAA," his endorsement opens, per the Endorsement of Myers J., June 4, 2026, paras. 1, 4–5. What troubled him was that the only people the process appeared to touch were the minority shareholders Mr. Xie would not bring with him to the buyer, and that "the CCAA is first and foremost a statute about compromises among creditors. I have not seen any hint of compromise from either side qua creditor or shareholder." The proceeding, he wrote, "prevented the brinkmanship of both sides from killing the goose because they could agree on how to split its eggs," per the Endorsement of Myers J., June 4, 2026, paras. 7–9.