Entourage Health: the Aylmer licences go by reverse vesting order

By the third week of August the Entourage Group was down to 15 employees, seven fewer than when the monitor last reported in June, and a Chief Operating Officer had left; to finish selling off what the business no longer needed, the company hired an operational advisor on July 28 to run the sale of equipment and the sale, disposition or destruction of inventory, per the Second Report of the Monitor, Aug. 20, 2026, paras. 13, 17. Aged packaged flower and pre-rolls had turned up in two third-party warehouses in Manitoba, which the monitor understood to be unsellable, and the Canada Revenue Agency had written twice in July: once to examine payroll records back to January 2025, once to select the debtors for an audit of their excise tax returns from April 1, 2024 to June 16, 2026, per the Second Report, Aug. 20, 2026, paras. 28, 30–31.

What still worked was the Starseed medical platform, run at reduced levels, and the licences under which the Aylmer, Ontario facility operates. On August 27, 2026, Justice Cavanagh of the Ontario Superior Court of Justice (Commercial List) approved a transaction built to keep those licences where they are: a reverse vesting order in favour of 1000460405 Ontario Inc., the highest bid in the court-approved sale process, per the Endorsement of Cavanagh J., Aug. 27, 2026, paras. 1, 9.

Five bids, and none from inside

The case arrived here on an application brought by the debtors' own senior secured lender and indirect owner, an affiliate of the LiUNA Pension Fund of Central and Eastern Canada, and under a sale process run by the monitor with an insider deadline of July 6, both reported here on June 26.

The monitor, Ernst & Young Inc., working with EY-Parthenon's M&A team, sent the teaser to approximately 131 parties across North America. Fourteen signed non-disclosure agreements and all fourteen went into the data room, per the Second Report, Aug. 20, 2026, paras. 35, 37–40. "By July 6, 2026, no insiders or affiliates informed the Monitor of their intention to participate as bidders in the SISP," the monitor reports, per the Second Report, Aug. 20, 2026, para. 41. The sale procedure itself provided that an insider or affiliate who missed that notice could not bid "whether directly or indirectly," and that the DIP lender had confirmed in writing it would not bid, per the SISP procedure appended to the Second Report, Aug. 20, 2026, App. A, Sched. A, ss. 3–4.

Five proposals came in by the July 30 bid deadline. After talking to certain bidders and consulting the lender's advisers, the monitor moved its selection deadline from August 7 to August 12 to give bidders more time; by then two of the five had resubmitted revised bids. On August 12 it chose 1000460405 Ontario Inc. as the successful bidder and designated a back-up bid, per the Second Report, Aug. 20, 2026, paras. 42–44, 46. The subscription agreement followed on August 20, per the Endorsement, Aug. 27, 2026, para. 7. The purchaser is a numbered Ontario company, named in the agreement as "1000460405 Ontario Inc., or its nominee," per the Second Report, Aug. 20, 2026, App. B, p. 46; it appeared at the hearing through Miller Thomson LLP, per the Endorsement, Aug. 27, 2026, p. 1.

The price is sealed. The monitor filed the agreement with its purchase price and deposit left blank and put the unredacted copy in Confidential Appendix 2; the summary of all five bids is Confidential Appendix 1. Public disclosure of the bids, the monitor said, "could adversely impact the Entourage Group's ability to maximize value in the event that the Transaction does not close," per the Second Report, Aug. 20, 2026, paras. 45, 49. Justice Cavanagh found the Sherman Estate test met and sealed both until closing or further order, per the Endorsement, Aug. 27, 2026, paras. 18–19 and the Ancillary Relief Order, Aug. 27, 2026, para. 5.

What the buyer takes, and what it leaves

The purchaser subscribes for new common shares of Entourage Health Corp.; the existing shares are cancelled for no consideration; and through the parent it indirectly takes Entourage Brands Corp., 2686913 Ontario Inc., Starseed Holdings Inc. and CannTX Life Sciences Inc., per the Approval and Reverse Vesting Order, Aug. 27, 2026, paras. 3, 6(f)–(g). The retained assets include the Aylmer facility, trade names and other intellectual property, permits and licences, tax losses, and all inventory except bulk cannabis. Left out are a majority of the equipment, the bulk inventory, cash on hand at the effective date, and every contract the purchaser does not designate, per the Second Report, Aug. 20, 2026, paras. 47, 50(a)–(b). Those go, with the excluded liabilities and any employees the purchaser names for termination at least five days before closing, to a new company, 1001724861 Ontario Inc., per the Approval and Reverse Vesting Order, Aug. 27, 2026, paras. 2, 6(a)–(d) and the subscription agreement at Second Report, Aug. 20, 2026, App. B, s. 1.01(vvv). After closing, the style of cause is to read 2437653 Ontario Inc. against 2686912 Ontario Limited, North Star Wellness Inc. and 1001724861 Ontario Inc., the two debtors outside the deal and the residual company, per the Approval and Reverse Vesting Order, Aug. 27, 2026, para. 22.

The excluded equipment and flower were already being sold. The debtors had closed several sales worth about $232,000 in aggregate and were finalizing a $260,000 bill of sale for equipment and the sale of approximately 1,335 kilograms of bulk flower, which the monitor considered reasonable. Those sales were larger than the monitor's existing authority of $50,000 a transaction and $500,000 in aggregate, so it asked for $300,000 and $1,000,000, per the Second Report, Aug. 20, 2026, paras. 24–27. The ancillary order granted both limits, per the Ancillary Relief Order, Aug. 27, 2026, para. 6.