Ecoideas: the bought RBC loan that became the only qualified bid

From a 68,282-square-foot leased warehouse and office at 630 Newpark Blvd. in Newmarket, Ontario, Ecoideas Innovations Inc. has since 2004 supplied retailers across Canada with organic and natural foods, supplements, cleaning products and body care, some of it under its own brands and some of it other companies' lines that it distributes, according to the first affidavit of its president, Rafic Sidani, sworn April 23, 2026 Affidavit of Rafic Sidani, Apr. 23, 2026, paras. 6–7. The teaser the proposal trustee sent to prospective buyers in June counted more than 800 customers Teaser, June 1, 2026, p. 2. In Sidani's account, sales fell 16% over two years, which the company puts down to inflation- and trade-driven price increases and to consumers spending less on high-end products, while the cost of renting and maintaining its premises rose 74%. Staff went from 35 to 25 before the filing Affidavit of Rafic Sidani, Apr. 23, 2026, paras. 14, 17.

Royal Bank of Canada, owed about $2.3 million under a loan agreement dated June 18, 2021, demanded repayment on March 2, 2026 and served notice of its intention to enforce its security. On March 31 the company filed a notice of intention to make a proposal under the Bankruptcy and Insolvency Act, naming Dodick Landau Inc. as proposal trustee. The Business Development Bank of Canada was owed about $110,000 under a 2019 loan agreement, also secured. Unsecured creditors were owed about $5.4 million: about $2.47 million to trade creditors, mostly suppliers of inventory and transportation, about $350,000 in Ontario rent arrears and about $2.6 million to shareholders and parties related to them, per the Affidavit of Rafic Sidani, Apr. 23, 2026, paras. 3, 10, 13, 18.

On July 7, by approval and reverse vesting order, Justice Kimmel approved a transaction that gives the buyer of RBC's position all of the company's shares.

The bank's position changes hands

The first plan, in Sidani's April affidavit, was for a related party to acquire RBC's secured debt and then fund a proposal or take part in a sale process; the company understood that RBC had rejected its initial proposal Affidavit of Rafic Sidani, Apr. 23, 2026, para. 21. By April 27, per the trustee's First Report, the talks had turned to whether the related party could make a stalking horse offer RBC would accept, and on April 24 RBC's counsel had proposed a 25-day extension to finish them, against the 45 days the company sought. The trustee also understood that RBC intended to object to the $90,000 administration charge ranking ahead of it First Report to Court of the Proposal Trustee, Apr. 27, 2026, paras. 18, 20–21, 31, 33. The order Justice Dunphy signed on April 28 has two operative paragraphs, one on service and one extending the time to file a proposal to May 25 rather than June 15. The charge is not in it Order of Justice Dunphy, Apr. 28, 2026, paras. 1–2.

The related party and RBC could not agree on terms, according to the trustee's Second Report. On May 20 RBC told the company it had sold its security to 1001611870 Ontario Inc., which the trustee describes as an arm's-length company. The trustee's counsel reviewed the security and the assignment, and the report records that RBC's security was valid and enforceable, that RBC held a first-ranking interest in the inventory and equipment it had financed, and that BDC appeared to rank first on all other property for all or part of its debt Second Report of the Proposal Trustee, May 22, 2026, paras. 16–18, 42(i). The assignment of debt and security agreement is dated May 19 Order and SISP, May 28, 2026, Sched. A, para. 32.

The company and the buyer then entered into a stalking horse subscription agreement dated May 22. The price was the RBC security itself, credit-bid at a value of approximately $2.3 million, plus cash to pay any priority payables, including certain BDC indebtedness should BDC have priority over RBC, and $20,000 for the trustee and its advisers to administer and wind down a residual company. The buyer would subscribe for shares amounting to all of the equity, and the existing shares would be cancelled without consideration. A $50,000 break fee, inclusive of HST and about 2% of the total consideration, would be payable if another bidder won Second Report of the Proposal Trustee, May 22, 2026, paras. 42(ii)–(iii), 44. The trustee gave the reason for the reverse vesting structure: the company "has various health product numbers, permits and licenses that are difficult to transfer without significant business interruption." It added that the agreement's value "far exceeds the highest end of the range of value reasonably expected" if the company went bankrupt and its assets were liquidated, citing a liquidation analysis it left out of the report to protect the sale process and confidential commercial information Second Report of the Proposal Trustee, May 22, 2026, paras. 40, 43.

A question from the bench

The motion came before Justice Conway on May 25. It was unopposed, but the materials had been served only on May 22. She extended the NOI to May 28, when the matter would come back to her at noon, and set out why: "I expressed my concerns to counsel about short service and, as well, whether the terms of the Stalking Horse Agreement are reasonable and in the best interests of stakeholders. This is particularly so given that it is a credit bid ($2.3 million) with an RVO structure, leaving nothing for the Company's $5.4 million in unsecured creditors. I questioned why the Company could not run the SISP and canvass the market without the Stalking Horse Agreement" Endorsement of Justice Conway, May 25, 2026, paras. 3–5.

The buyer answered on May 27 through Miller Thomson LLP. A committed going-concern purchaser, its letter argued, would hold the confidence of suppliers, customers and staff and give any rival a fully negotiated benchmark to bid against. It was prepared to forego the break fee "if doing so would alleviate the Court's concerns," and it would credit-bid either way: "Our client is the senior secured creditor and intends to credit bid that position, either as stalking horse purchaser or as a bidder," per the Supplement to Second Report of the Proposal Trustee, May 27, 2026, App. C, pp. 14–15.

The trustee's supplement, filed the same day, listed four advantages it saw in keeping the stalking horse, the first being certainty of a sale while the insolvent company could still live within its own cash flow, with no debtor-in-possession loan facility to support it. In the case of Ecoideas, it wrote, "it is forecast to run out of cash by the end of July 2026 if a buyer is not found and/or a sale does not close by then." It also attached a form of sale process with no stalking horse, acceptable to the company and the trustee, and recommended that version if the court remained concerned Supplement to Second Report of the Proposal Trustee, May 27, 2026, paras. 7–10.

On May 28 Justice Conway approved the sale process and the stalking horse agreement and extended the time to file a proposal to July 9. The order records that the bidder had agreed to no break fee or expense reimbursement, "nor shall any such fee or reimbursement be paid in any circumstances," and that nothing in it approved the vesting the agreement contemplated Order and SISP, May 28, 2026, paras. 3–4, 9.