Innovative Fitness: three NDAs, no LOI, and the lender's $2 million credit bid

Innovative Fitness franchises and runs what Terry Holland, a director of its lender, calls premium fitness studios, providing personalized health and wellness services "with a focus on personal training" and offering, among other services, group classes, pilates sessions, recovery services and nutrition coaching, per the Affidavit #1 of Terry Holland, June 18, 2026, para. 8. From Vancouver, where the receiver's notice gives its address as 2080 West 10th Avenue, the business ran one corporate-owned studio, in Toronto, and nine franchised studios in British Columbia and Ontario operated by independent franchisees, per the First Report, Aug. 6, 2026, para. 2, the Notice and Statement of the Receiver, July 24, 2026, p. 2 and the Second Report, Sept. 18, 2026, para. 15(d). The trademarks listed in the sale agreement include INNOVATIVE FITNESS, WHAT IF YOU COULD? and TRAIN THE TRAINER, and among the contracts in the sale is a services agreement with The Ritz-Carlton Hotel Company of Canada, Ltd. dated May 1, 2025, per the Second Report of the Receiver, Sept. 18, 2026, App. A, Scheds. D–E.

On September 24, 2026, Justice Greenberg of the Supreme Court of British Columbia approved the sale of the franchisor's shares, the brand's trademarks and the franchise agreements to that lender, Lifespan Holdings Inc., for a credit bid of $2.0 million of its debt plus the priority payables outstanding at closing, per the Approval and Vesting Order, Sept. 24, 2026, para. 2 and the Second Report of the Receiver, Sept. 18, 2026, para. 21. Lifespan had taken an assignment of that debt on June 12, per the Affidavit #1 of Terry Holland, June 18, 2026, para. 24. The receiver, FTI Consulting Canada Inc., contacted 36 potentially interested parties; three signed non-disclosure agreements, and none sent a letter of intent, per the Second Report of the Receiver, Sept. 18, 2026, paras. 17–19.

A loan that came due in March

The debt began with other lenders. Under a Second Amended and Restated Loan Agreement dated July 31, 2025, three original lenders extended a senior secured facility of $2,850,000 to a group of borrowers that included Wrkout Holdings Ltd. and 1145643 B.C. Ltd., secured by a general security agreement dated July 29, 2024, per the Affidavit #1 of Terry Holland, June 18, 2026, paras. 9, 12. The facility was advanced, Holland swore, "to support the revitalization of the Innovative Fitness corporate operations and franchise system, roll out Phase 1 of the proprietary 'IF Health' offering, and prepare the go-to-market strategy for expansion of the Innovative Fitness franchise network." All amounts owing were due by March 31, 2026, per the Affidavit #1 of Terry Holland, June 18, 2026, paras. 10–11.

Bank of Montreal was already in the structure. Under a letter agreement of December 18, 2019, it had made secured credit facilities available to 1145643 B.C. Ltd., guaranteed by other companies in the group, among others, and secured by a general security agreement, among other interests. On the day of the 2025 loan agreement, BMO and the original lenders signed a Second Amended and Restated Priority, Subordination and Standstill Agreement, under which BMO's security "is postponed and subordinated to the Lender's Security, in all respects, to the extent of the principal amount of $2,850,000, less any amount of principal that has been repaid to or cancelled by the Lender on account of the indebtedness secured by the Security, plus interest thereon (up to the rate of ten percent (10%) per annum)," per the Affidavit #1 of Terry Holland, June 18, 2026, paras. 19–22. When the receiver was appointed, BMO was owed approximately $2.4 million, per the First Report of the Receiver, Aug. 6, 2026, para. 4.

The maturity date passed without repayment. The affidavit lists other defaults: 1053775 B.C. Ltd. had not fully paid under the lease of premises at 510 W Georgia St, the borrowers had not delivered management-prepared financial statements on time, and on June 2, 2026 BMO issued its own demand letters with notices of intention to enforce security under s. 244(1) of the Bankruptcy and Insolvency Act. On June 12 the original lenders assigned their rights under the loan agreement and security to Lifespan, and Innovative Fitness Canada Ltd., the franchisor, signed a joinder the same day that made it a borrower and a party to the security, per the Affidavit #1 of Terry Holland, June 18, 2026, paras. 24–26. Lifespan's payout statement as at June 12 put principal at $2,849,999.00 and interest at $445,719.26, for a total of $3,295,718.26, with a per diem of $902.94, per the Affidavit #1 of Terry Holland, June 18, 2026, para. 23 and Ex. A.

Four of the borrowers had by then amalgamated into 1145643 B.C. Ltd., the last on or around June 12. Lifespan sought no relief against four others because they "have no assets and have all effectively ceased operations," per the Affidavit #1 of Terry Holland, June 18, 2026, paras. 15–17. Lifespan demanded payment on or about June 15. The next day the remaining borrowers waived the statutory notice period and consented to early enforcement. The debtors, the affidavit says, "have advised the Lender that they do not have sufficient funds to repay the Indebtedness"; Lifespan would advance nothing more except to a court-appointed receiver under a priority charge; and Holland understood from discussions with BMO and the debtors that BMO would not extend further credit either, per the Affidavit #1 of Terry Holland, June 18, 2026, paras. 27–28, 30, 35, 38. The account of the collapse on the record is the lender's.

A receiver, and a floor built from the debt

Lifespan's petition was filed on June 22, per the Petition to the Court, June 22, 2026, p. 1. On July 16 Justice Sigurdson appointed FTI receiver and manager of the property of Wrkout Holdings Ltd., 1145643 B.C. Ltd. and Innovative Fitness Canada Ltd. under s. 243(1) of the BIA and s. 39 of the Law and Equity Act, gave the receiver and its counsel a first charge for their fees, and authorized it to borrow up to $250,000 under a receiver's borrowings charge, per the Receivership Order, July 16, 2026, paras. 1, 21, 24. The receiver's statutory notice eight days later listed $581,000 of property, $368,000 of it cash and the rest receivables, inventory, prepaids and property, plant and equipment at their values in unaudited June 30 statements, against $5.7 million, before interest and costs, owed to the two secured creditors and about $321,000 to unsecured ones, per the Notice and Statement of the Receiver, July 24, 2026, pp. 2–3. The unsecured list includes, among others, two CEBA Program entries of $67,087 and $66,837, the B.C. employer health tax at $30,031, Fasken Martineau DuMoulin LLP at $53,956 and MNP at $47,743, per the List of Known Creditors, July 24, 2026, p. 1.

On August 6, three weeks into the receivership, the receiver brought forward an asset purchase agreement with Lifespan, dated that day, and asked the court to accept it as the stalking horse in a sale and investment solicitation process. The price was a credit bid of $2.0 million plus the priority payables outstanding on the closing date and any cure costs on assumed contracts, to a maximum of $50,000, per the First Report of the Receiver, Aug. 6, 2026, paras. 5, 14(a). Priority payables, in the agreement's definitions, are amounts owing under the receiver's charge, the receiver's borrowings charge and any claims against the assets that rank ahead of Lifespan's debt, per the Second Report of the Receiver, Sept. 18, 2026, App. A, s. 1.1(ll).