Laundry Collective: shareholder loans to zero, ordinary creditors at 25%

Laundry Collective Inc. owns five companies and nothing else. Four of them run hotels from leased buildings in Hamilton, Cambridge, Kitchener and Waterloo; the fifth holds a contract to manage a hotel that a third party owns, per the Report of Trustee on Proposal, Aug. 19, 2026, s. A, p. 2. The statement of affairs signed by one of the company's directors on August 19, 2026 carries those holdings, 100% of the shares of each subsidiary, as five lines of securities at $1.00 apiece: total assets of $5.00, against liabilities of $6,101,542.28, per the Statement of Affairs (Form 78), Aug. 19, 2026, pp. 1–2. The hotels trade as The Laundry Rooms, which the brand's own website presents as fully furnished, pet-friendly apart-hotels, on Augusta Street in Hamilton, in Cambridge's Gaslight District, in Kitchener's Station Park and in uptown Waterloo.

On September 25, 2026, at the courthouse at 80 Dundas Street in London, Ontario, Associate Justice S. Kettle approved the proposal the company filed on August 18 under Division I of Part III of the Bankruptcy and Insolvency Act, which its creditors had accepted on September 9. The motion was brought by the proposal trustee, MNP Ltd., with "no one else appearing," per the Order Approving Proposal, Sept. 25, 2026, recitals and para. 1. A forbearance agreement with the company's secured lender required court approval by September 30, 2026, per the Report of Trustee on Proposal, Aug. 19, 2026, s. C, p. 5.

Four hotels and a 5% fee

The company began operating in 2020 and raised approximately $6.0 million in shareholder advances and third-party promissory notes; the hotel subsidiaries, MNP writes, "have struggled with cash flow since inception," and since 2025 they have paid Laundry a management fee of 5% of their gross revenue, which is its sole source of revenue, per the Report of Trustee on Proposal, Aug. 19, 2026, s. A, p. 2. The management subsidiary has one contract with minimal revenue and pays Laundry nothing, though management intends to grow it, per the Report of Trustee on Proposal, Aug. 19, 2026, s. A, p. 2. Every operation runs at the subsidiary level; Laundry holds the debt and the administrative staff, per the Report of Trustee on Proposal, Aug. 19, 2026, s. C, p. 5.

The trustee's report sets out 2025 by company. Laundry August Inc., the Hamilton hotel, lost $43,380; Laundry Gaslight Inc. in Cambridge lost $48,060; Laundry Station Park Inc. in Kitchener lost $156,650; and Laundry Circa Inc. in Waterloo earned $282,535. The holding company lost $751,512, and the group as a whole $717,068. The subsidiaries' own figures, the report cautions, "do not include the significant interest expenses and administrative salaries which are included in the Laundry financial statements," per the Report of Trustee on Proposal, Aug. 19, 2026, s. C, pp. 4–5.

The causes are management's, as MNP relays them: significant start-up costs for leasehold improvements and furnishings; buildings that had to be renovated and readied after they were leased, a period in which the hotel companies paid full rent with no revenue coming in; and lease rates that "were too high," per the Report of Trustee on Proposal, Aug. 19, 2026, s. C, p. 4. The statement of affairs compresses the same account into one line under "Other": "Significant start-up costs for leasehold improvements and furnishings and high lease rates in subsidiary operating companies," per the Statement of Affairs (Form 78), Aug. 19, 2026, p. 1.

The hotel companies are themselves insolvent, according to the report, with significant debts to their landlords for back rent, to housekeeping providers and for municipal accommodation taxes, and one of them owes the Canada Revenue Agency approximately $75,000 in unpaid HST. Shareholders had been putting money in to cover the hotels' operating losses, "however, given the poor financial situation of the consolidated group, the shareholders were no longer willing to inject funds unless it was part of a global restructuring." Management means to keep all four hotels running, but they "are not viable unless the landlords will agree to settlement of the back rent and reduced rent going forward," and those talks are being held outside any formal insolvency, per the Report of Trustee on Proposal, Aug. 19, 2026, ss. A, C, pp. 2, 5.

The lender outside the compromise

The company's one secured creditor is PeterT Holdings Inc. of Hamilton, the only party with general security registered against it in Ontario's personal property registry, owed $1,000,000 plus ongoing interest and legal costs. The trustee understands that the same lender holds general security over the hotel companies' assets, per the Report of Trustee on Proposal, Aug. 19, 2026, ss. E, G, pp. 5–6. Laundry could not pay the interest and defaulted on its credit facilities. On May 12, 2026 the lender issued notices of intention to enforce security to Laundry and to each hotel subsidiary, and the parties then signed the forbearance agreement with its September 30 deadline; without approval by then, and without an extension, the lender "will be in a position to enforce its security against all assets of Laundry and the Hotel Subsidiaries," per the Report of Trustee on Proposal, Aug. 19, 2026, s. C, p. 5.

The company renegotiated the secured debt separately, with new payment terms meant to extend the schedule, free up cash flow and avoid enforcement proceedings, per the Report of Trustee on Proposal, Aug. 19, 2026, s. A, p. 2. The proposal itself is made "only to the Unsecured Creditors" and recites that the company "has reworked the debt owed to its sole Secured Creditor, which debt is also owed by the five (5) operating companies, in order to free-up cashflow and extend the payment terms," per the Proposal, Aug. 19, 2026, ss. 2.1–2.2. Because it "does not amend or affect the existing payment or security arrangements," the trustee's summary says, no secured creditor has a claim in it, per the Report of Trustee on Proposal, Aug. 19, 2026, s. B, p. 3.

Two classes of unsecured creditor

For the vote, the proposal divides the unsecured creditors into two classes. The Continuing Shareholders, shareholders who lent the company money and will stay on as shareholders, receive no payment from the proposal; each of their claims "shall be fully compromised and reduced to $0.00 upon full completion of the Proposal." Former Shareholders, who have agreed to have their shares redeemed or cancelled, are paid on their loans as Ordinary Creditors, per the Proposal, Aug. 19, 2026, ss. 1.1(g)–(h), (t)–(u), 3.1(f)–(g), 4.2. By the company's records the continuing shareholders hold $1,284,593 in claims and the ordinary creditors $3,816,950, per the Report of Trustee on Proposal, Aug. 19, 2026, s. G, p. 6.