Island Fishermen's: WhiteCap comes off the creditor list, and the plant goes to a vote

On September 14 the board of the Island Fishermen's Co-operative held an information session, open to every member, to bring them up to date on the proceedings and answer their questions before a vote. The monitor, Ernst & Young Inc., understands that 47 members attended, and that the board arranged the session as an additional measure of care and diligence, given what was about to be put to them and the co-operative's more than 86 years. The co-operative has 239 members, 91 of them active. The vote is set for a special meeting at 6:30 p.m. on September 28, and the first clause of the resolution, in the monitor's translation from the French, reads: "That the facilities and assets of the Association coopérative des pêcheurs de l'Île limitée (ACPI) be sold through a court-approved sale and investment solicitation process (SISP) conducted by the Monitor appointed by the Court of King's Bench, with a view to facilitating, where possible, the reopening of the plant and the retention of employee jobs," per the Second Report of the Monitor, Sept. 21, 2026, paras. 12, 20, 22.

The board had already resolved, on September 1, to proceed with a sale process run by the monitor, subject to the court's approval. As of September 21 the monitor "is not aware of a restructuring plan that could be advanced for approval by this Honourable Court," and the company's own notice of motion says that significant collective efforts by the local community and the local business community to assemble "a viable and realistic plan to maintain the activities and the existence of the Moving Party" have produced none to date, per the Notice of Motion, Sept. 16, 2026, Part B, paras. 13, 15 and the Second Report of the Monitor, Sept. 21, 2026, paras. 18–19. When the case was reported here on August 21, the co-operative had decided not to process the fall catch, and the monitor had named refinancing, a sale process and a plan of arrangement among its options, with no date on any of them, per the First Report of the Monitor, Aug. 19, 2026, paras. 23, 28.

The clause from 2018

The monitor's first report, on August 19, set out the co-operative's creditors from its books in seven lines, and the first was WhiteCap International Seafood Exporters Inc., the broker through which its product is sold, at $14.1 million USD, per the First Report of the Monitor, Aug. 19, 2026, para. 14. The list in the second report has six. It opens with the Business Development Bank of Canada at $7.9 million and runs through the members' Loan Capital at $4.7 million, the Atlantic Fisheries Fund at $4.4 million, lobster and snow crab suppliers at $2.9 million, the Atlantic Canada Opportunities Agency at $2.7 million and other trade suppliers at $2.3 million, per the Second Report of the Monitor, Sept. 21, 2026, paras. 11, 15.

WhiteCap's solicitor had written on August 18, as reported here at the time, that title passes to WhiteCap when it advances funds, so that it has no claim against the co-operative, and had asked the company to "correct" its position in writing within the proceedings; the monitor then understood the company's position to be that title stayed with the co-operative until WhiteCap sold to a third party, per the First Report of the Monitor, Aug. 19, 2026, paras. 18–21.

In response to that letter the monitor and its counsel read the Amended and Restated Supply and Marketing Agreement between the co-operative and WhiteCap, made as of July 6, 2018, which company counsel says remains in force, together with a sample bill of lading and invoice between the two. The agreement calls WhiteCap the "buyer" and the co-operative the "seller," and gives WhiteCap the exclusive right to market, distribute and sell every seafood product the co-operative manufactures, produces or processes. Article 7 ties the passing of title to shipment from the co-operative's facility, where WhiteCap's letter had tied it to the advance, and it does so "notwithstanding that any portion of the purchase price for same shall be paid to [the Company] by [WhiteCap] after the said shipment," per the Second Report of the Monitor, Sept. 21, 2026, paras. 29–31. The monitor now agrees with the company's revised position, set out at paragraph 23(a) of an affidavit sworn on September 16 by Brian Bezeau, the general manager. "Based on the legal review and the information currently available, the Monitor understands that WhiteCap is not a creditor of the Company," the report says, and the company and the monitor have told WhiteCap so, per the Second Report of the Monitor, Sept. 21, 2026, paras. 32–34.

The company has framed it for the court as a correction. The first of four topics its notice of motion brings to the court's attention is "the nature of the relationship between the Moving Party and Whitecap and the need to correct previous statements in the original affidavit of the Applicant seeking the Initial Order," per the Notice of Motion, Sept. 16, 2026, Part B, para. 17(a). The monitor, for its part, now writes that it "initially understood" the co-operative to sell through the agency of a broker, per the Second Report of the Monitor, Sept. 21, 2026, para. 25. The co-operative's books carried the US$14.1 million at June 30 as an advance payable to be set off against future sale proceeds, and its audited statements for the period ended December 31, 2025 carried a payable to WhiteCap of $6.9 million CAD on the same methodology; the monitor has been supporting the company in its discussions with its external auditor "regarding the accounting treatment of Whitecap transactions," per the Second Report of the Monitor, Sept. 21, 2026, paras. 17(e), 26.

Two partners, two insolvency clauses

On August 19, the day after its title letter, WhiteCap wrote again through counsel, this time as a shareholder. The co-operative owns 5% of WhiteCap's issued shares and is a party to its unanimous shareholders' agreement, dated as of January 2008, and WhiteCap gave notice that it intends to exercise a purchase option over those shares under s. 3.6, headed "Right of First Refusal – Insolvency, Death or Discontinuance of Supply of Product." Where a party's shares may pass by operation of law on the appointment of a receiver or trustee, or the party makes an assignment for its creditors, takes steps to wind up or "is adjudged bankrupt or insolvent," the section deems a grant, first to the corporation and then to each of the other parties, of a right to buy them "at the Book Value thereof as of the date such option arises without making any discount or allowance if the Subject Shares represent a minority interest." The option runs for 60 days from notice, per the Second Report of the Monitor, Sept. 21, 2026, paras. 35–36.

WhiteCap has acknowledged that the initial order stays the exercise of the option without the written consent of the company and the monitor, or leave of the court, and has asked for both consents. The two have declined, for three reasons. Any sale of the co-operative's WhiteCap shares needs the court's approval under the initial order and the ARIO. The shares "have not been exposed to the market, and no information has been provided as to how Book Value compares with Fair Market Value." And the option "may contravene the 'anti-deprivation rule' and may accordingly be unenforceable," per the Second Report of the Monitor, Sept. 21, 2026, paras. 37–38. That is the rule that a contract term cannot, on insolvency, take out of the estate value that would otherwise be available to creditors.