InKan: a deadlocked board, its shareholders' notes and a receiver on consent

InKan Limited, incorporated in Ontario on April 27, 1976, manufactures custom glass in Brampton, and two holding companies own it. Both are also its creditors on promissory notes: HD Newco Limited, with 40% of the common and preferred shares, and InKan Corporate Group Ltd., with 60%, per the Application Record, Sept. 29, 2026, Tab 2 (affidavit sworn Sept. 18, 2026), paras. 2, 7, 15 and Ex. "A", p. 24 and the Notice of the Receiver, Oct. 17, 2026, para. 4(a)–(c).

On September 29, 2026, HD Newco applied to the Ontario Superior Court of Justice at Brampton, court file CV-26-00007503-0000, under s. 101 of the Courts of Justice Act and s. 243 of the Bankruptcy and Insolvency Act, for an order appointing Albert Gelman Inc. receiver and manager of InKan's assets, undertakings and properties, per the Application Record, Sept. 29, 2026, Tab 1 (Notice of Application), para. 1(b). Justice Agarwal, deciding in writing on October 1, recorded that "The parties consent to an order appointing a receiver over the assets of the respondent InKan Limited," and set the application down for 10 a.m. on October 9, in person, per the Endorsement of Justice Agarwal, Oct. 1, 2026, para. 1. Justice Stewart made the order on October 9, reciting the consent of HD Newco, InKan and Albert Gelman, per the Order of Justice Stewart, Oct. 9, 2026, p. 2 and para. 2.

A loan from each owner

The structure dates from 1999, when InKan Corporate Group was incorporated and took 60% of InKan; the other 40% was held through 1392302 Ontario Limited, a predecessor of HD Newco. HD Newco now owns 16.67% of InKan Corporate Group. The affidavit in support of the application calls the two holding companies "related corporations, being controlled by the same group," and says there is no unanimous shareholders' agreement at InKan or at either of them, per the Application Record, Sept. 29, 2026, Tab 2 (affidavit sworn Sept. 18, 2026), paras. 3, 7, 9, 11.

The two loans are $2,000,000 from HD Newco and $3,000,000 from InKan Corporate Group, each on a promissory note. The affidavit says both have been outstanding since 2007 and are "secured against the assets and undertakings of InKan," perfected by registrations under Ontario's Personal Property Security Act, per the Application Record, Sept. 29, 2026, Tab 2 (affidavit sworn Sept. 18, 2026), paras. 15–16.

In May 2026, HD Newco called its loans. A letter from its lawyers dated May 7 demanded payment of $196,939 under a second HD Newco note, dated December 31, 2025, by 5:00 p.m. on May 8; one dated May 11 demanded $2,011,609.59 by May 21 on the note of June 30, 2007, made up of $2,000,000 of principal, $7,500 of interest that fell due on April 1, 2026, and $4,109.59 of per diem interest, per the Application Record, Sept. 29, 2026, Tab 2, Ex. "H", pp. 96–99. InKan has paid nothing toward the demands, the affidavit says. InKan Corporate Group's note is payable, with interest, on December 31, 2027, or earlier if demanded, and the affidavit reports no demand under it, per the Application Record, Sept. 29, 2026, Tab 2 (affidavit sworn Sept. 18, 2026), paras. 17–19.

What the applicant knows, and from whom

The affidavit is sworn by a director of HD Newco who also sits on InKan's three-member board and is its vice-president. InKan's president, it says, has been solely responsible for the day-to-day management of the company's affairs, per the Application Record, Sept. 29, 2026, Tab 2 (affidavit sworn Sept. 18, 2026), paras. 1, 12–13. "[W]hile I do not have direct knowledge of InKan's current operations and financial status," the deponent swears on the president's advice, including through counsel or documents, that InKan is insolvent: that it cannot meet its obligations as they generally become due, "including by defaulting on the HDN Note and Second HDN Note"; that it has ceased paying its current obligations in the ordinary course, including by failing to pay interest owed under HD Newco's note; and that its property, at a fair valuation or on a sale under legal process, would not be sufficient to pay all of its obligations, due and accruing due, "including the Related Party Debts," per the Application Record, Sept. 29, 2026, Tab 2 (affidavit sworn Sept. 18, 2026), para. 20.

To the best of the deponent's knowledge, InKan "appeared to have operated successfully as a going concern" until approximately 2023–2024, per the Application Record, Sept. 29, 2026, Tab 2 (affidavit sworn Sept. 18, 2026), para. 14. The affidavit does not say what changed then, and neither it nor its exhibits give revenue, earnings or a headcount.