Dynamic Restoration: 31 per cent for unsecured creditors, in MNP's example

The fund in MNP Ltd.'s example is $1,400,000: a $400,000 lump sum and 60 monthly payments of $16,666.67. MNP, proposal trustee of Dynamic Restoration Ltd., a Nova Scotia construction and restoration contractor, estimates that it would pay in full the Canada Revenue Agency's priority claim for payroll source deductions under s. 60(1.1) of the Bankruptcy and Insolvency Act and give unsecured creditors 31%. In a bankruptcy, the trustee expects, CRA would be left short on that claim and "there would be no other funds available for distribution to any other creditors," per the Trustee's Second Report, Oct. 15, 2026, paras. 1, 47, 52–53. The company is still evaluating the terms of its eventual proposal, and the figures are, the report says, "only an illustrative example of a potential proposal and the actual proposal filed by the Company could vary materially from this example," per the Trustee's Second Report, Oct. 15, 2026, paras. 47, 51.

The company filed its notice of intention on August 18, 2026, and was seeking its first extension when the case was reported here on September 12. Registrar Raffi A. Balmanoukian granted it on September 17, extending the stay "up to and including November 1, 2026," per the Stay Extension Order, Sept. 17, 2026, para. 2. The company now asks, under s. 50.4(9) of the BIA, to extend the stay to December 7, 2026, which the report describes as 45 days after the date set for the hearing of its application, and seeks directions "with respect to recovery of funds seized by a creditor during the Stay," per the Trustee's Second Report, Oct. 15, 2026, paras. 4, 11, 56.

What the example pays, and what a bankruptcy would

In the comparison appended to the report, $92,000 of trustee's and legal fees and GST comes off the proposal fund, leaving $1,308,000: $1,134,269 for CRA's Source Deduction Claim and $173,731 for general unsecured creditors whose claims total $552,583. CRA would receive $1,252,574, which the report puts at 83% of its claim as presently filed, per the Trustee's Second Report, Oct. 15, 2026, para. 53 and App. E. That priority figure is higher than the $747,485 CRA's proof of claim placed under s. 60(1.1); the first report said MNP expected the priority claim to increase once the company completed its 2025 and 2026 payroll returns, per the Trustee's First Report, Sept. 11, 2026, paras. 29–30.

The bankruptcy column estimates receipts of $958,205: the $265,820 in the company's bank accounts on October 14, receivables of $500,995 and $191,390 for vehicles and equipment. In valuing the receivables, the notes say, the trustee applied a 70% collectability rate for potentially uncollectible balances. After $128,990 of costs, among them $47,848 in auctioneer commissions, the $829,215 available would all go to CRA's Source Deduction Claim, 55% of its total claim by the report's estimate, and unsecured creditors would receive nothing, per the Trustee's Second Report, Oct. 15, 2026, paras. 29, 52–53 and App. E.

MNP's view is that a proposal "could include" a material lump sum to CRA on account of that claim upon approval by the creditors and the court, then periodic payments into the fund for CRA's balance and for unsecured creditors. It is possible, the report says, that the proposal "may include a request that CRA consent to an extended repayment term of the Source Deduction Claim." The trustee does not expect the proposal to compromise secured creditors or employee claims, or the company to need external financing, investment or asset sales to fund it, per the Trustee's Second Report, Oct. 15, 2026, paras. 47–48, 50.

Reconciled to February 2025

With the help of an external bookkeeper, which now also processes its payroll and pays the remittances directly to CRA, the company has reconciled its bank accounts up to February 2025, filed T4s for 2024 and 2025, and begun preparing its outstanding HST and corporate tax returns for fiscal year end 2025, per the Trustee's Second Report, Oct. 15, 2026, paras. 20–22.

MNP compared the cash balances in the East Coast Credit Union and Bank of Montreal statements with the company's internal balance sheets from July 2025 to September 2026 and found material differences "in each instance." The balance sheets also carry an account titled "Undeposited Funds," which shows $344,260 in each instance, with no transactions affecting it. Management reported that the company holds no bank accounts or cash on hand apart from the cash in those two accounts, and attributed its difficulties with bank reconciliations and bookkeeping to staff turnover and to its attention being on operations and revenue rather than financial reporting, per the Trustee's Second Report, Oct. 15, 2026, paras. 23–24.