Entourage Health: the exit deferred, and a stay sought to October 2027

On October 26, 2026, Health Canada told the purchaser, 1000460405 Ontario Inc., the monitor and Entourage Brands Corp., the licence holder, that its assessment of the change of control was complete and that, on the information provided, it "did not have any concerns with the proposed change in control as it relates to the requirements of the Cannabis Regulations," the monitor, Ernst & Young Inc., reported the next day, per the Supplement to the Third Report of the Monitor, Oct. 27, 2026, para. 9. In the same report EY said it was working with the purchaser and the debtors to close the transaction "as soon as possible," and asked the court to extend the stay of proceedings, due to expire on October 30, to October 29, 2027, per the Supplement, Oct. 27, 2026, paras. 10–11.

Its report of October 20 had asked for an ending instead: a stay to the earlier of a termination time or December 6, 2026; distributions to the applicant, 2437653 Ontario Inc., on its Senior Secured Indebtedness; termination of the CCAA proceedings once the monitor filed a certificate; and authority for the monitor to put 1001724861 Ontario Inc., the residual company, and the two debtors the purchaser is not taking, 2686912 Ontario Limited and North Star Wellness Inc., into bankruptcy, per the Third Report of the Monitor, Oct. 20, 2026, paras. 7(f), 65 and the Notice of Motion (Motion Record of the Monitor, Tab 1), Oct. 20, 2026, para. (a)(ix). The supplement reports that the Attorney General of Canada, for and on behalf of Employment and Social Development Canada, has asked that the monitor's request for relief under the Wage Earner Protection Program Act be adjourned pending the outcome of a proposed appeal in the CCAA proceedings of Synaptive Medical Inc. EY considered the request and found an adjournment "appropriate in the circumstances and consistent with the approach taken in recent cases." In light of it, EY is deferring its request to terminate the proceedings, the bankruptcy relief included, per the Supplement, Oct. 27, 2026, paras. 3, 5, 7–8.

The motion was returnable on October 28, 2026, at 10:30 a.m., by videoconference, per the Notice of Motion, Oct. 20, 2026, p. 1. No order from that hearing is in the record.

On August 27 the court approved the subscription agreement with 1000460405 Ontario Inc., added 1001724861 Ontario Inc. to the proceedings as the entity incorporated to take the excluded assets, liabilities, debtors and contracts, and extended the stay to October 30, as reported here on August 28, per the Third Report, Oct. 20, 2026, paras. 5–6. The summary of the bids and the unredacted agreement, which holds the purchase price, are sealed until the transaction closes or the court orders otherwise, per the Second Report of the Monitor, Aug. 20, 2026, paras. 45, 49 and the Third Report, Oct. 20, 2026, para. 6(d).

What Health Canada needed

The debtors submitted a Change in Control Request Form to Health Canada on or about September 3, 2026. During its review Health Canada advised that approximately $340,000 was owing in annual cannabis regulatory fees for the 2026–2027 fiscal year. After consulting the purchaser, the debtors, with the monitor's help, gave Health Canada the information needed to set up a payment plan, and by October 20 the monitor was not aware of any further action required on those fees, per the Third Report, Oct. 20, 2026, paras. 34–35. As the monitor understood it that day, the assessment was "in its final level of review with Health Canada," per the Third Report, Oct. 20, 2026, para. 18(g).

Since August 20 the business has run under an interim operating agreement, signed on August 24, under which the purchaser "effectively bears the economic risks and benefits" of the business until closing, within a budget the purchaser and the monitor approved, while the purchased entities remain the legal owners of the retained assets and the operators of the business, per the Third Report, Oct. 20, 2026, paras. 37–39. The adult-use business, which the debtors had begun winding down before the filing, has been kept running in the ordinary course in accordance with the subscription agreement, and the Starseed medical platform at reduced levels, per the Third Report, Oct. 20, 2026, paras. 19–20. In the report's summary of the business, the retail brands include Color Cannabis, Dime Bag and Saturday Cannabis, and the Starseed Medical brand, through which the group distributes its medical cannabis, is the exclusive partner for locals of the Labourers' International Union of North America, per the Third Report, Oct. 20, 2026, para. 13(b).

All material sales of the excluded equipment and bulk flower are complete, the report says; the equipment left consists of minor items not expected to generate meaningful proceeds, and all bulk flower that will not transfer to the purchaser has been sold, so none has to be destroyed. The packaged flower and pre-rolls the debtors found in two Manitoba warehouses on August 10 reached Aylmer after shipping on September 15. The purchaser has confirmed they are a retained asset, per the Third Report, Oct. 20, 2026, paras. 25–28. The Canada Revenue Agency advised on September 28 that its payroll audit was complete with no outstanding obligations; its audit of the excise tax returns for April 1, 2024 to June 16, 2026 was still under way, per the Third Report, Oct. 20, 2026, paras. 29–30. The debtors employed nine people on October 20, six fewer than in August. The purchaser intends to keep a limited number of them and terminate the rest, and the monitor expects that three may be retained after closing, per the Third Report, Oct. 20, 2026, paras. 15, 36, 80.

Distributions to the applicant, and none for ResidualCo's creditors

The LiUNA Pension Fund of Central and Eastern Canada, through its affiliates, is the debtors' senior secured creditor, their subordinated secured creditor and their ultimate indirect equity owner, the Third Report recalls. As at May 15, 2026 the debtors owed the applicant approximately $240.1 million, with interest still accruing. Of that, $19,150,723 is owed under an amended and restated credit agreement of October 28, 2022 between the debtors and Bank of Montreal, assigned to the applicant as of June 16, 2023, and the report defines it as the Senior Secured Indebtedness; the other $220,946,979 is owed under the debtors' amended and restated credit agreement of January 31, 2023 with the applicant, per the Third Report, Oct. 20, 2026, paras. 14, 16.

The October 20 motion would authorize the monitor to pay the applicant, from the proceeds of the transaction and of the other asset sales, on account of the Senior Secured Indebtedness, provided that the claims ranking ahead of it, including the court-ordered charges and the priority payments under the subscription agreement, are first funded or retained, and that the payments in aggregate do not exceed that debt, per the Third Report, Oct. 20, 2026, para. 49. In light of the distributions, the monitor instructed Fasken Martineau DuMoulin LLP to give it an opinion on the security for that debt. Subject to customary assumptions and qualifications, the opinion concludes that the loan documents give the applicant a valid and enforceable security interest in the personal property of each debtor and in the Aylmer property, properly perfected in Ontario, per the Third Report, Oct. 20, 2026, paras. 43–44.