Kidoodle: the lenders who brought the receivership are the stalking horse

Kidoodle.TV, the children's over-the-top video streaming service of A Parent Media Co. Inc. (APMC), has remained online during the receivership. APMC terminated all of its employees on or about August 31, 2026, before AlixPartners Restructuring, Inc. was appointed receiver of APMC and its subsidiary Kidoodle, Inc. on September 3; the receiver has since engaged a limited number of them as independent contractors to, among other things, maintain the operation of the Kidoodle.TV platforms and preserve the debtors' assets. Victory+, APMC's professional sports-related streaming service, is offline, the receiver understands from management. "The value of the Debtors' business is, in the Receiver's view, highly perishable," AlixPartners writes; it depends, the report says, on the streaming platform and cloud environments continuing to operate, on retaining content, advertising and distribution counterparties and subscribers, and on the continued availability of the former employees now engaged as contractors, per the First Report, Oct. 13, 2026, s. 1.0, para. 1; s. 2.1, paras. 2–5, 7.

The sale process the receiver now asks the court to approve arrives with a bidder already in it, and the bidder is the group on whose behalf the receivership was sought. "The Stalking Horse Bidder consists of the 2L Holders, each of whom is, directly or indirectly, a director of APMC, and whose Holder Representative is the Applicant in these proceedings," the report says, per the First Report, Oct. 13, 2026, s. 3.0, para. 6. They are the five holders of APMC's Senior Secured Second Lien Convertible Note, owed US$4,000,000 under it: Team Canada SSM LLC, TriWest Lower Mid-Market Fund I, L.P., Douglas G. Nyhoff, James R. Lites & Charla Kim Smith, jointly, and Joseph M. DePinto, with Dino DeLuca as their holder representative, per the Application (SISP approval), Oct. 13, 2026, paras. 1(c), 14.

The receiver's application, filed with its First Report on October 13, is returnable at 11:30 a.m. on October 20, by Webex, before Justice B.B. Johnston. It asks the court to approve, among other things, the process; the holders' letter of intent of October 13 and its transaction "solely as the stalking horse bid for the SISP"; a US$50,000 expense reimbursement; and the report and the receiver's activities, "without approving professional fees," per the Application (SISP approval), Oct. 13, 2026, p. 1; para. 1(b)–(c), (e), (g). The signed receivership order and the receiver's preliminary creditor list were reported here on September 15.

What the holders would buy, and for what

Under the letter the holders, directly or through a newly incorporated company, would acquire substantially all of APMC's assets and all of Kidoodle's, including the receivables, the streaming platform, the programmatic advertising stack and COPPA-compliant ad proxy, the Kidoodle.TV and Victory+ brands, APMC's data lake and first-party user data, and all content contracts. The shares of APMC's direct and indirect subsidiaries, Kidoodle's among them, are excluded. The consideration, payable on closing, has five parts in the receiver's summary: cash for all outstanding obligations secured by the Receiver's Charge and the Receiver's Borrowings Charge, as verified by the receiver; cash for all other priority charges the receiver verifies as outstanding, other than the Bank of Montreal's debt; US$2.0 million in cash on account of the BMO debt, with the balance assumed by the purchaser; "a non-cash credit bid of the full amount of the indebtedness owing under the 2L Note (being $4.0 million), which will be confirmed as indefeasibly paid in full on Closing"; and US$1.00 for all of Kidoodle's property, per the First Report, Oct. 13, 2026, s. 1.3, para. 1; s. 3.1, paras. 1–2. The letter itself says "not less than $2.0 million of the BMO Debt shall be repaid in cash on Closing," per the First Report, Oct. 13, 2026, App. "B", Sch. "C" (letter of intent), s. 1.1(c).

In the receiver's summary, the BMO debt is to be repaid by the purchaser on or after closing from receivables APMC billed before closing and the purchaser collects afterwards, on terms it and BMO are to agree, and the purchaser would grant the bank security "in a form and substance to be agreed upon between BMO and the Purchaser." The receiver's legal counsel has reviewed BMO's security; subject to customary assumptions and qualifications, the review indicated that the bank holds a first-ranking secured interest in APMC's property. The receiver considers the cash for the charges, the cash on the BMO debt and the assumption of its balance "a material benefit to the estate," and understands that BMO "takes no position on the SISP at this time," per the First Report, Oct. 13, 2026, s. 2.3.1, para. 4; s. 3.1, para. 2; s. 3.2, paras. 1(d), (j). The application puts the bank's debt at approximately US$3.8 million when the receivership order was made, an amount that "remains subject to an updated balance," per the Application (SISP approval), Oct. 13, 2026, para. 11.

The holders are to pay a US$200,000 deposit before the October 20 application, refundable in listed circumstances, among them if the process is not approved. If their transaction fails to close because a superior bid in the process supersedes it, they are entitled to a US$50,000 expense reimbursement, "to be paid by the superior bidder as part of the consideration for its superior bid," per the First Report, Oct. 13, 2026, App. "B", Sch. "C" (letter of intent), ss. 2, 3.4. The proposed order would direct the receiver to pay it if the stalking horse bidder is not the successful bidder, and states: "No payment obligation of, or charge against, the Receiver or either of APMC or Kidoodle is created in respect of the Expense Reimbursement," per the Application (SISP approval), Oct. 13, 2026, Sch. "A" (proposed order), para. 11. Because the process requires a superior offer to exceed the letter's total consideration by at least the reimbursement, the receiver says, the reimbursement "does not reduce the recoveries otherwise available to the Debtors' stakeholders"; the process adds a minimum increment of US$50,000. In the receiver's experience the amount is "well within the customary range for expense reimbursements in insolvency proceedings," per the First Report, Oct. 13, 2026, s. 3.2, para. 1(f); App. "B" (SISP), para. 5(w).

Apart from listed binding provisions, among them the deposit, the reimbursement and exclusivity, the letter is non-binding; a definitive agreement is to be negotiated in a period ending November 10, or another date the parties agree. The process requires the holders' binding offer, by definitive documents, at least ten days before the bid deadline, and posts it in the data room. As currently drafted, the receiver notes, the bid "remains subject to the completion of the Purchaser's due diligence, including in respect of the ownership of assets within the APMC Group and the contracts that may need to be assigned and the associated cure costs." While the letter runs, and absent the purchaser's consent, the receiver is, among other things, to maintain Kidoodle.TV's assets and operations in good working order and use commercially reasonable efforts to keep its contractor relationships with 17 former employees the letter lists, per the First Report, Oct. 13, 2026, s. 3.1, para. 3; App. "B" (SISP), para. 28; App. "B", Sch. "C" (letter of intent), ss. 3.1, 6, 18 and Sch. "C".

A non-arm's-length bid, in the receiver's words

"The Receiver is alive to the issues that arise from a stalking horse bid advanced by a non-arm's-length party," the report says, and it sets out, among other features, how the process was designed in response. The receiver alone administers it, as an officer of the court, and the stalking horse bidder has no role in soliciting, evaluating or selecting competing bids. The receiver may not disclose another bidder's identity or terms to it except as an auction or approval application requires, or with that bidder's written consent. Diligence information given to the bidder that is not already in the data room will be placed there for all potential bidders, and the bid "will be fully market-tested through the SISP and will only be presented to the Court for approval if no Superior Offer is received," per the First Report, Oct. 13, 2026, s. 3.0, para. 6. The proposed order would put the bidder's exclusion from soliciting, evaluating or selecting competing bids into the order itself, per the Application (SISP approval), Oct. 13, 2026, Sch. "A" (proposed order), para. 4.