Mercy Falls: MNP questions a film deal the company is not party to

MNP Ltd., the monitor of Mercy Falls BC Inc., has told the Supreme Court of British Columbia that it does not support either order the company seeks in an application returnable November 12, 2026. One would authorize a $200,000 interim distribution to Nuts & Bolts Productions, LLC, the company's parent and interim lender, as a partial repayment of principal under the interim facility. The other would extend the stay of proceedings from November 30, 2026 to February 26, 2027. The payment, the monitor writes in its Fifth Report of November 9, would cut the cash the company is forecast to hold at February 28, 2027 from approximately $260,000 to approximately $60,000, which "would not provide an appropriate reserve." On the stay, it "does not have adequate information to support the requested extension" and would support "a shorter extension of the Stay Period," per the Fifth Report of the Monitor, Nov. 9, 2026, paras. 10, 11(h), 41, 43, 61–62.

The time is wanted for an agreement the company did not sign. Mercy Falls BC was formed to produce one film, an adaptation of the novel Shiver. On September 26, 2026, the studio that was to fund the production, Mercy Falls Films, LLC, entered into a distribution agreement for the film with The Solution Entertainment Group LLC and "certain related parties." The company is not a party. It has paused enforcement against the studio so as not to interfere with the agreement, and the monitor, which received a copy on October 30, writes that the agreement "on its own, does not establish who is legally obliged to pay the Petitioner, the amount to be paid, the source of payment, the conditions to payment or the timing of payment," per the Fifth Report of the Monitor, Nov. 9, 2026, paras. 11(d), 15–16, 24, 28, 32, 36, 58.

One film, and two companies called Mercy Falls

Mercy Falls BC's chief place of business is Vancouver, where the film was shot between October 28 and December 9, 2024. Wholly owned by Nuts & Bolts, it once employed upwards of 170 full-time staff; when it filed it had no employees but a part-time accountant, per the president's first affidavit, May 14, 2025, paras. 13–14, 18, 21–22, 29.

The money was to come from Mercy Falls Films, a Wyoming company that, under a Production Services Agreement of July 25, 2024, was to advance approximately US$20,000,000 to fund the production. Despite the name, the proposed monitor reported, the studio is unrelated to the company: "They share the name 'Mercy Falls' as this is the name of the fictional town in the Film where the story takes place." That report and the studio's own evidence put the copyright and motion-picture rights with the studio, per the Proposed Monitor's Report, May 15, 2025, paras. 18–19 and the studio director's affidavit, May 22, 2025, para. 7.

The company's account of its insolvency is that the studio did not pay. Its president swore that funding "frequently, if not always, came late," that the studio was more than US$5,000,000 behind when work stopped in December 2024, and that as at May 8, 2025 it had paid approximately US$11,000,000 of the nearly US$20,000,000 it agreed to provide, per the president's first affidavit, May 14, 2025, paras. 77, 84, 86. The monitor's Fifth Report restates the account: the studio's "failure to provide approximately US$9,000,000" left the company unable to meet its vendor commitments and continue the production, per the Fifth Report of the Monitor, Nov. 9, 2026, para. 17.

The studio opposed the proceeding at the start; its director affirmed on May 22, 2025 that "any proposed CCAA reorganization that is premised upon the ownership or sale of the Film by Petitioner would constitute misappropriation of Studio property," per the studio director's affidavit, May 22, 2025, paras. 5, 28.

Justice Basran granted the initial order on May 16, 2025, per the Order Made After Application, May 16, 2025, p. 1. In Canadian dollars, the proposed monitor's table put the company's liabilities at $8,471,709 as at May 12, 2025, including $3,139,179 owed to National Bank of Canada on a loan secured against the company's refundable tax credits and $341,000 to Nuts & Bolts, both listed as secured, and $4,974,506 unsecured, of which $2,916,465 was owed to Canadian trade creditors and $1,899,246 to U.S. and international ones, per the Proposed Monitor's Report, May 15, 2025, paras. 28, 30. Nuts & Bolts became interim lender at 10% a year, compounded monthly, on a facility of up to $500,000 that was raised to $1,100,000 on September 8, 2025, per the Proposed Monitor's Report, May 15, 2025, para. 52 and the Order Made After Application (Interim Financing), Sept. 8, 2025, paras. 3–4.

A judgment in Vancouver, a refund, and a judgment in California

On September 8, 2025 the court ordered that the company's breach-of-contract claim against the studio be heard inside the CCAA proceeding, per the Fifth Report of the Monitor, Nov. 9, 2026, para. 6(a). The studio did not respond to the claim, the company's application says, and on October 23, 2025 Justice Basran granted the company default judgment, with damages summarily assessed at $4,736,455 and liberty to seek more for amounts from October 1, 2025, per the Notice of Application, filed Oct. 21, 2025, Part 2, para. 13, the Order Made After Application (default judgment), Oct. 23, 2025, para. 1 and the Order Made After Application (damages), Oct. 23, 2025, paras. 1–3.

The Canada Revenue Agency confirmed a tax credit refund of $3,950,128 on March 24, 2026; when it arrived in April, the bank applied part of it to repay its loan and released approximately $566,000 to the company, per the Fourth Report of the Monitor, Apr. 21, 2026, paras. 27–28, 32. That payment, approximately $3,313,000, was "paying the first secured creditor in full," per the Fifth Report of the Monitor, Nov. 9, 2026, para. 22(d).

By April 2026 the company's U.S. counsel had taken the judgment to the Superior Court of California, served the studio and obtained an entry of default, and a motion to appoint a receiver over the studio was set for July 13, 2026. On April 23, 2026 Justice Basran extended the stay to November 30, 2026, per the Fourth Report of the Monitor, Apr. 21, 2026, paras. 19–21, 23 and the Order Made After Application (Stay Extension), Apr. 23, 2026, para. 3. According to the company's fifth affidavit, as the Fifth Report relays it, the Superior Court of California gave the company judgment against the studio on September 3, 2026 for US$3,649,315.18. The monitor calls that judgment the company's "principal asset," per the Fifth Report of the Monitor, Nov. 9, 2026, paras. 19, 22(a).

The pause, and the agreement behind it

After the California judgment, the company decided, "in consultation with its U.S. Counsel and the Interim Lender," to pause further enforcement against the studio, including seeking a receiver over it, "so as not to interfere with the Distribution Agreement and the ongoing efforts to monetize the Film." Its fifth affidavit, the monitor reports, says it does not have the funds for a receivership in the United States, and Nuts & Bolts "is not prepared to fund or support the appointment of a receiver in the United States at this time," per the Fifth Report of the Monitor, Nov. 9, 2026, paras. 28–29.

Concurrently with enforcement, the Fifth Report says, the company, "working [with] Studio and certain related parties, pursued efforts to monetize the Film," and those efforts produced the agreement. Among the parties whose obligations under it the company has, on the information available, "no express right to enforce" is Top Film Distribution Corp., which the monitor describes as "the ultimate original source of financing that had previously been funding Studio in relation to the Film," per the Fifth Report of the Monitor, Nov. 9, 2026, paras. 20, 30, 36.