He Yuan: an 8.5% sale that piggy-back rights could turn into 100%

Wealth One Bank of Canada, a federally regulated digital bank, was founded in 2016 and owned by ten shareholders; one of the three largest, at approximately 18.7%, was He Yuan Investment Ltd., controlled by Morris Chen. The receiver understands that in 2022 the Minister of Finance ordered the founding shareholders to divest, a requirement that culminated in July 2025, when Globalive WOB SPV LP acquired all of the bank's shares and provided common and preferred units in the partnership to the bank's shareholders. To obtain regulatory approval from the Finance Minister and the Office of the Superintendent of Financial Institutions (OSFI), the receiver understands, the founders' units were restricted and issued as Class B: the economic rights of the equivalent Class A unit, without voting rights, a part in the partnership's governance or any non-public information about the bank, per the Receiver's First Report, Mar. 12, 2026, paras. 14–17.

He Yuan came out of that transaction with 30,815,384 Class B common units, 10,785,038 Class B preferred units, as many warrants to acquire more common units, and a commitment to contribute up to $2,518,808.81 of further capital, per the Receiver's Second Report, July 13, 2026, para. 15. A year later it holds 41,600,422 Class B common units, approximately 8.5% of the partnership's common units on a fully diluted basis and what the receiver calls He Yuan's "primary asset of value," per the Notice of Application, filed July 15, 2026, Part 2, paras. 13, 16. In an application set for July 28, MNP Ltd., as receiver, asked the Supreme Court of British Columbia to approve a sale process for that block and, within it, to stay the other unitholders' right of first refusal and piggy-back rights.

A bankruptcy, a capital call and a settlement

The receivership is one of several proceedings the receiver's notice of application traces to the personal bankruptcies of Mr. Chen and his wife, Ming Yan Liu. MNP is trustee of both estates and receiver of He Yuan and of its sole shareholder, Xin Yuan Hui Holdings Ltd. (XY Holdings), whose common shares Mr. Chen holds 60% and Ms. Liu 40%, per the Notice of Application, filed July 15, 2026, Part 2, paras. 6, 13. Shortly after a preservation order in Mr. Chen's bankruptcy, Globalive LP issued a capital call on October 31, 2025 to all its limited partners for their full unfunded commitments, He Yuan's due November 20. The partnership agreement's default provisions, which the receiver calls "punitive," would have answered an uncured failure to fund with the automatic sale of He Yuan's common units at $0.01 a unit, per the Receiver's First Report, Mar. 12, 2026, paras. 3, 20–21.

On November 19, 2025, on the petition of MNP as Mr. Chen's trustee, Madam Justice Fitzpatrick appointed MNP receiver of He Yuan under s. 39 of the Law and Equity Act, ordered Globalive not to transfer the units issued to He Yuan, and stayed the capital call, per the Receivership Order, Nov. 19, 2025, paras. 1, 9, 11. Globalive had opposed the appointment and sought instead a variation letting it rescind the preferred units and warrants "based on alleged misrepresentations made by the Company in the Subscription Agreement"; its application was dismissed, per the Receiver's First Report, Mar. 12, 2026, para. 26.

The receiver and Globalive settled on February 26, 2026. Under a unit purchase and cancellation agreement of that date, Globalive LP bought the preferred units for cancellation for what the receiver reports as $2,121,167.99 in cash, which it says equals the original subscription price; the receiver exercised the warrants for another 10,785,038 Class B common units, representing in the agreement that the net $10,123.20 payable to do so would come from Mr. Chen's bankruptcy estate; and He Yuan's unfunded commitment was reduced to $0. The parties released the alleged misrepresentation claims on closing, with no admission by either. The First Report estimates the warrants alone at approximately $2.0 million, on the valuation ascribed to the common units in the Globalive transaction, per the Receiver's First Report, Mar. 12, 2026, paras. 28–31; App. "A", s. 4; App. "B", ss. 2–4. Justice Fitzpatrick approved the sale on April 1, no one appearing for the respondents, and it closed on April 10, per the Approval and Vesting Order, Apr. 1, 2026, preamble, para. 1 and the Receiver's Second Report, July 13, 2026, para. 18.

Sections 5.9 and 5.10

The common units are still Class B. The receiver understood at July 13 that Globalive LP's request to OSFI to convert them to Class A remained under review, with no determination; the receiver would sell anyway, since any purchaser would need OSFI approval and the units are contemplated to become Class A on closing, per the Receiver's Second Report, July 13, 2026, paras. 19–20. The receiver had sought to engage OSFI, which "declined to provide input," per the Notice of Application, filed July 15, 2026, Part 2, para. 17.

The application turns on two sections of the amended and restated limited partnership agreement dated July 7, 2025. Section 5.9 is a right of first refusal: when a unitholder receives a third-party offer, the other unitholders may acquire the units on the same terms. Section 5.10 gives piggy-back rights: when a holder of more than 5% of a class receives such an offer, the other unitholders may sell their own units to the same purchaser on the same terms. Neither applies to a sale to an existing unitholder, per the Notice of Application, filed July 15, 2026, Part 2, para. 18.

The receiver's case against both leans on Aleem Bandali, a managing director of MNP Corporate Finance Inc., the firm it proposes as sales agent. A buyer, the Second Report says, "would be investigating the purchase of 8.5% of the outstanding common units but would have to be prepared to purchase 100% of the common units if every unitholder exercised its Piggy-Back rights herein." Size carries a regulatory consequence: the receiver understands that ownership above 10% may trigger increased review and approvals from OSFI as a "significant interest" under section 8 of the Bank Act, so, the report says, the exercise of any piggy-back rights would push the transaction "into a different category" of regulatory approval. Mr. Bandali "is concerned that those rights could singlehandedly thwart the ability of the Sales Agent and the Receiver to find a buyer in the truncated court supervised sale process contemplated herein," per the Receiver's Second Report, July 13, 2026, paras. 56, 58, 69–70.

The draft order provides that sections 5.9 and 5.10 "will not apply to any offer obtained by the Receiver in the SSP," with each unitholder's rights under them "stayed and suspended" as to those offers, per the Notice of Application, filed July 15, 2026, Sch. "B", para. 3. The receiver says the relief applies only to itself and the sale process, and that a purchaser would remain bound by both sections after closing, per the Receiver's Second Report, July 13, 2026, paras. 74–75. Its notice of application likens that to Ford Credit Canada Ltd. v. Welcome Ford Sales Ltd., 2011 ABCA 158, where Ford's buyback rights were stayed while the dealer agreement passed to a buyer that would then be subject to them; it lists Dust & Blast Machine Services, Arctic Glacier Income Fund and Quest University Canada (Re), 2020 BCSC 1883, as cases in which rights of first refusal were stayed or did not apply to a court-ordered sale; and it argues that the court's power under s. 39 to make any order that is "just or convenient" is functionally the same as the CCAA power applied in Quest. On the second right it says: "The Receiver is not aware of cases considering Piggy-Back rights," per the Notice of Application, filed July 15, 2026, Part 3, paras. 40, 43, 45.