Darwynn: what the $7.5 million left behind

Until August 18, 2026, Darwynn Ltd. provided order fulfillment services to online retailers and other businesses, storing products in leased and shared warehouses and distributing them to end customers. That day Ernst & Young Inc., as monitor, delivered its certificate that the purchase price had been paid and the conditions to closing satisfied or waived, and substantially all of Darwynn's operating assets, its cash on hand included, passed to 2379338 Ontario Inc. — Darwynn's majority shareholder, owned by Guoyin Xie, who chaired Darwynn's board, and before closing both a secured creditor under a pre-filing loan and the lender under the court-approved debtor-in-possession facility, per the Fifth Report of the Monitor, Sept. 25, 2026, paras. 5, 17–19, 22, 41–42. The name went too. The purchased assets include the rights to the business names "Darwynn Ltd", "Darwynn Fulfillment", "Darwynn Driver" and "Darwynn Shipper," per the Asset Purchase Agreement, App. "A" to the Fourth Report of the Monitor, Aug. 6, 2026, Sch. "A", item 5, and the Fifth Report lists, among the relief the monitor seeks, a change to the style of cause "to reflect the new legal name of Darwynn," a name the report does not state, per the Fifth Report, para. 9(e)(i).

What remains under the Darwynn caption is a company with no functioning management, about $3,481,000 of cash in the monitor's hands, and an estimate of remaining liabilities that the cash does not cover, per the Fifth Report, paras. 25, 33. The road to the sale, and Justice Myers's September 18 order lifting the stay over the shareholder litigation, were reported here on September 18. The Fifth Report and the monitor's motion record, both dated September 25, account for how the price was paid and what it left, and ask the court to end the CCAA proceeding in a bankruptcy that EY would be authorized to file in Darwynn's name.

Credit, cash and the last two weeks of trading

The asset purchase agreement set the price at $7,500,000 plus the assumed liabilities. At closing, $577,808 of it was satisfied by credit-bidding the outstanding pre-filing loan from 2379338 Ontario, which the report calls the 237 Loan, and $3,104,479 by credit-bidding the outstanding DIP facility; $3,817,713 was paid in cash to the monitor on Darwynn's behalf. The credit bid was applied in full and final satisfaction of both debts, and the buyer also took on the liabilities the agreement specified, per the Fifth Report, paras. 20–21. In management's schedule as of February 20, the loan from the applicant had stood at $531,233 with accrued interest, per the Monitor's Pre-filing Report, Feb. 25, 2026, para. 26. In May, assuming a fully drawn DIP facility, the monitor had estimated the sale would generate about $3.9 million in cash before unpaid restructuring costs secured by the administration charge, per the Third Report of the Monitor, May 25, 2026, para. 61.

The receipts and disbursements schedule appended to the Fifth Report, kept in thousands of dollars, fills in the rest. The DIP balance stood at $3,000,000 on August 3 and had accrued $104,000 of interest and fees by closing, when the credit bid repaid it. Between August 3 and August 17 the company collected $1,975,000 and disbursed $2,513,000: $1,160,000 of operating costs, $580,000 of lease payments, $187,000 of payroll and benefits, $497,000 of other costs and $88,000 of restructuring costs. The $410,000 left in its accounts at closing is recorded as "Cash Acquired by Purchaser," per the Fifth Report, App. "D".

Before closing, the purchaser offered employment to all but three of Darwynn's employees. Darwynn terminated its employees' employment on August 18 and 19, per the Fifth Report, para. 23; the pre-filing report had counted approximately 74 employees across Ontario, Alberta, Quebec and British Columbia, per the Pre-filing Report, para. 25.

Five lines of debt, and what sits outside them

After closing, the monitor used part of the cash to pay certain outstanding fees of itself, its counsel and Darwynn's CCAA counsel that the administration charge secured. The post-closing column shows $337,000 of restructuring costs against the $3,818,000 of net sale proceeds, and an ending balance of $3,481,000, per the Fifth Report, paras. 25–26; App. "D".

Against that cash the monitor sets an estimate, drawn from Darwynn's available accounting records, of about $4.03 million in remaining liabilities, leaving out the debt the credit bid satisfied and the liabilities the buyer assumed. The schedule behind the figure is dated September 8 and headed "Preliminary estimate, for discussion purposes only." It has five lines: $1,772,475 of pre-filing trade payables; $1,854,384 on the Prime Nutrisource loan as of September 8; $278,065 owing to 237 "re 40 Pullman Premises (incl. Feb 2026 Rent)"; $21,131 owing to Prime Nutrisource; and $102,000 owing to a creditor the schedule calls "Shanghai," for a total of $4,028,055, per the Fifth Report, para. 24; App. "C".

Prime Nutrisource Inc., like the applicant, was owned by Mr. Xie, the monitor's pre-filing report said, citing the affidavits of Mr. Xie and Mr. Bafandeh filed with the application. The same report listed the Prime Nutrisource loan at $1,771,370 with accrued interest as of February 20 and named 2379338 Ontario as landlord of Darwynn's leased Toronto premises at 40 Pullman Court, per the Pre-filing Report, paras. 21 n. 2, 26–27. The Prime Nutrisource loan agreement, an amended and restated agreement dated August 14, 2025, was left out of the sale as an excluded contract, as was the convertible note held by NMN Group Ltd., per the Asset Purchase Agreement, App. "A" to the Fourth Report, Sch. "D", item 1.

That note sits outside the $4.03 million. The schedule carries it at $2,697,945; the monitor understands its conversion status "remains disputed and is subject to litigation." Claims against Darwynn in connection with the oppression actions are entered as "TBD." The cash, the monitor reports, is about $549,000 less than the $4.03 million "before taking account of the NMN Promissory Note, potential litigation claims against the Debtor or further administration costs," per the Fifth Report, paras. 24–25; App. "C".

Yan (Randy) Liu, who sat on Darwynn's board, has signalled a claim of his own. On August 21, his counsel advised the monitor that he intends to seek indemnification from Darwynn for legal fees incurred in defending proceedings commenced by Mr. Xie and Mohammad Reza Bafandeh, who was Darwynn's chief executive officer, and the monitor understands he will rely on an indemnification agreement with Darwynn effective October 7, 2024. The monitor "has not determined the validity or quantum of the proposed claim," per the Fifth Report, paras. 42, 44.

The monitor does not seek authority to make a distribution to creditors under the termination order. It anticipates using part of the cash for the remaining costs of the CCAA proceeding and making the balance available to the estate in bankruptcy: "The bankruptcy process will provide for the determination of claims and any distribution of the Debtor's remaining funds," per the Fifth Report, para. 27.

The potential claims that stayed with the company

Among the excluded assets left with Darwynn, the Fifth Report says, are "any potential claims the Debtor may have against Aird & Berlis LLP or any of the Debtor's directors and officers. The Monitor has not reviewed these potential claims and expresses no view as to their merits or value," per the Fifth Report, para. 22. Justice Myers set out the same division on August 7: the agreement conveys neither the shareholder claims against Darwynn nor Darwynn's potential claims against any shareholder, director or Aird & Berlis, and none of them will be released in the CCAA proceeding. "For now, Darwynn may have few exigible assets," he wrote. "Moreover, its assets pool could increase if it sues others and collects," per the Endorsement of Myers J., Aug. 7, 2026, paras. 13, 15.