Good Natured: a third extension, and notice served on short service

On October 19, Justice Sean Dunphy of the Ontario Superior Court of Justice (Commercial List) gave the seven Good Natured packaging debtors the third extension they had asked for, and in the endorsement that granted it addressed debtors beyond this one. "I am singularly displeased to note that the motion – which should have been a relatively routine affair given the progress made in this restructuring – was not served upon the service list with anywhere near enough notice," Justice Dunphy wrote. The court was "advising the parties and by publishing these reasons other debtors using the BIA proposal provisions to attempt a restructuring of their debt. The BIA provisions governing applications for stay extensions are not mere suggestions," per the Endorsement of Justice Dunphy, Oct. 19, 2026, paras. 2–3.

The debtors' notice of motion, dated October 15 and returnable at noon on Monday, October 19, asked for an order abridging the time for service; extending their time to file a proposal under s. 50.4(9) of the Bankruptcy and Insolvency Act, and the stay that goes with it, from October 20 to December 4, 2026; and approving the activities of the proposal trustee, TDB Restructuring Limited, per the Motion Record, Oct. 15, 2026, Tab 1, Notice of Motion, para. 1. "I am granting the order requested," the endorsement says, and later: "I have signed the order extending time and excusing the short service." The signed order is not in the record; December 4 is the date the notice of motion and the trustee's Third Report give, per the Endorsement, Oct. 19, 2026, paras. 3, 5 and the Third Report of the Proposal Trustee, Oct. 15, 2026, para. 35.

"Not mere suggestions"

Of the restructuring itself, the seven-paragraph endorsement says the insolvent applicant, Good Natured Products Industrial Canada GP Inc., "has made significant progress in its efforts." It goes on: "A significant asset sale has been arranged and its terms already approved by this court. The transaction will need further time to be completed. The progress and good faith of the debtor in doing all of these things is not in question. The presumption that no stakeholder needs to be consulted on the continuation of the stay of proceedings except as a matter of form is." "Even where, as here, the trustee has been consulted, there are other stakeholders and they need time to consider their position," it says, per the Endorsement, Oct. 19, 2026, paras. 3–4.

On service, Justice Dunphy wrote: "If prescribed service periods are to be shortened or curtailed, it is incumbent upon the applicant to make that specific request and to provide an evidentiary foundation to justify the request. That has not happened here. That is not acceptable. I am exceptionally granting the extension of time here but I am serving notice on the professional community that this sort of clemency for sloppy shortcomings cannot be presumed upon." Of the signed order excusing the short service, the endorsement adds that "obviously should anyone allege they have been prejudiced, they will be heard and their position considered." The endorsement names no section, rule or case; it speaks of "The BIA provisions governing applications for stay extensions" and of "prescribed service periods," per the Endorsement, Oct. 19, 2026, paras. 3, 5.

The Bank's qualms

The endorsement records no opposition to the extension. The only creditor named in its list of appearances is Royal Bank of Canada, whose counsel appeared with counsel for the debtors and for the trustee, per the Endorsement, Oct. 19, 2026, p. 1. What it does record is a concern: "The major secured creditor (the Bank) had some qualms regarding the cash flow forecast placed before me and in particular the prospect of the sales proceeds being significantly consumed by the debtor without further order." The debtor, the endorsement says, has given the Bank "its assurance and undertaking – which undertaking I am recording here – that not more than $50,000 of the sales proceeds will be used by the debtor in its operations unless with the consent of the Bank." The trustee took no objection to the undertaking being given or recorded, and the endorsement closes: "Order accordingly and undertaking of debtor noted for the record," per the Endorsement, Oct. 19, 2026, paras. 6–7.

The forecast in question, the debtors' ten-week cash-flow statement to December 20, was prepared with the trustee's assistance, and the trustee considers it and its assumptions reasonable. Its projected receipts, the trustee says, consist primarily of receivables and of proceeds from further machinery and equipment (some of it subject to RBC's security), residual inventory, the Brampton building and the Ayr plant, per the Third Report, Oct. 15, 2026, paras. 31–34. It assumes, hypothetically, that operations will be wound up and asset sales, if any, completed by the week ending December 6, 2026, per the Third Report, Oct. 15, 2026, App. "G", where the August statements had said the week ending November 27, per the Second Report, Aug. 26, 2026, App. "I". The trustee supported the extension, saying the debtors have acted in good faith and with due diligence and that it does not expect any creditor to be materially prejudiced, per the Third Report, Oct. 15, 2026, para. 37.