National Traffic Safety: a holding proposal on the last day

"However, as confirmed by the Proposal Trustee, the Company has filed a holding proposal this afternoon," Justice J. Dietrich wrote on October 26 of National Traffic Safety Management Inc., whose notice of intention to make a proposal had been filed on April 24 and whose six-month maximum stay period, the endorsement notes, expired that day. "Therefore the risk of deemed bankruptcy has been addressed." The court had set aside urgent time because of "the potential deemed bankruptcy of the Company following today," to hear the motion of the proposal trustee, TDB Restructuring Limited, to approve a sale of the company's assets to Ramudden Global (Canada) Inc., per the Endorsement of Dietrich J., Oct. 26, 2026, paras. 1, 4–5. The company provides traffic management to keep construction and infrastructure workers safe at job sites, per the Responding Motion Record of NTSM, director's affidavit sworn Oct. 26, 2026, para. 3.

The sale was not decided. The company advised the court that it "has received committed funding and intends to file a substantive proposal and a motion for, among other things, approval of interim financing, in the near term," and counsel for "the Proposed DIP Lender, Cor Financial Corp" was among those appearing. The court made time on November 2 and granted one thing: an increase in the administration charge, which secures the fees of the trustee, its counsel and the company's counsel, from $200,000 to $300,000, per the Endorsement of Dietrich J., Oct. 26, 2026, p. 2 and paras. 1(c), 5, 7, 9 and the Seventh Report of the Proposal Trustee, Oct. 23, 2026, para. 29. When this case was reported here on October 23, the court had just declined to stay the deemed bankruptcy.

Seven requests, one order

The endorsement lists what the trustee asked for: approval of the transaction in Ramudden's binding letter of intent dated October 16, with the purchased assets vesting in Ramudden on closing; an order authorizing and directing the company to complete it and, "to the extent necessary," authorizing the trustee to take steps on the company's behalf; the larger administration charge; approval of the fees of the trustee and its counsel; authority to pay outstanding fees "prior to the Company's possible assignment into bankruptcy"; a first-ranking charge for the fees of TDB and its counsel as the company's prospective trustee in bankruptcy, which the endorsement calls the Bankruptcy Trustee's Charge; and the sealing of the confidential appendices to the trustee's Sixth and Seventh Reports. Only the increase in the administration charge was granted. "In the meantime, I am prepared to grant an increase to the Administration Charge as requested by the Proposal Trustee," per the Endorsement of Dietrich J., Oct. 26, 2026, paras. 1, 9.

The trustee's Seventh Report, dated October 23, says the transaction "was selected following a competitive process in which interested parties were afforded an opportunity to submit Offers and subsequently improve their respective Offers," and that it gives an opportunity to preserve the business as a going concern, "which is expected to result in materially greater recoveries than an immediate bankruptcy and liquidation," with "the continued employment of the Company's approximately 60 employees." The comparison with a bankruptcy sits in a liquidation analysis filed as a confidential appendix, which the trustee asks the court to seal until closing, per the Seventh Report of the Proposal Trustee, Oct. 23, 2026, paras. 22–28.

The report's plan for the proceeds runs through a bankruptcy: distribution after the company's deemed assignment, by a trustee in bankruptcy running a claims process, and no authority sought to distribute anything before then other than professional fees. The letter of intent "contemplates certain payments and allocations of the purchase price to various creditors and other stakeholders," the report says. "However, the Proposal Trustee has not agreed to, and does not recommend, the payment allocations or distribution waterfall contemplated in the LOI," per the Seventh Report of the Proposal Trustee, Oct. 23, 2026, paras. 36–38. The trustee's factum leaves room for a proposal. It describes distribution following "either the Company's deemed assignment in bankruptcy or some other process that results in the Company's bankruptcy," and asks that the administration charge extend to "any proposal filed by the Company on or before October 26, 2026," per the Factum of the Proposal Trustee, Oct. 26, 2026, paras. 20, 33.

An asset purchase agreement still has to be signed, the factum notes, and the trustee does not know whether the sole director, whose company A2 Environmental Group Inc. made the competing bid and who opposes the transaction, "will cause the Company to cooperate." So it seeks enhanced powers, if necessary, to complete the transaction for the company, relying on Third Eye Capital Corporation v. Ressources Dianor Inc., 2019 ONCA 508, a receivership decision it reads as holding that the court's power to approve a sale "must necessarily be accompanied by the authority to enter into an agreement to sell those assets," per the Factum of the Proposal Trustee, Oct. 26, 2026, paras. 5, 37–38.

The company's case for a creditors' vote

The company's aide memoire of October 25 asks the court not to approve the Ramudden transaction "at this short motion," and to let it file a proposal "that will generate superior value than the Proposed Transaction, including for unsecured creditors. Creditors should decide the outcome by vote." It says the company had arranged financing from COR Financial to fund a proposal, with a commitment letter expected on the morning of October 26, and had sent TDB a holding proposal to be filed that Monday "to avoid a deemed bankruptcy." "This is a proposal proceeding," it continues. "Part III of the BIA contemplates that the debtor will make a proposal and that creditors will vote on it. A sale under s. 65.13 of the BIA is available, but it does not displace the debtor's statutory right to put a proposal to its creditors," per the Aide Memoire of NTSM, Oct. 25, 2026, paras. 1–4.

The company's sole officer and director swore an affidavit for the hearing on October 26. It calls Ramudden "a business competitor of the Company," and traces the director's involvement to discussions that union representatives initiated in September 2025, out of concern over the company's deteriorating finances and the potential loss of their members' jobs, per the Responding Motion Record of NTSM, director's affidavit sworn Oct. 26, 2026, paras. 2, 8–10. On the bidding, it says the single business day A2 had to provide a competing offer "did not provide A2 with sufficient time to negotiate with the Lender over the weekend." A2's price components had been disclosed to the service list and the court for the October 5 motion, it says, because "it was not expected that there would be another party interested in buying the business at the price A2 had offered to pay," while A2 "had no knowledge of the terms of Ramudden's offer before it received a copy of the LOI following the bid deadline." Over the weekend, the director deposes, an agreement in principle was reached for COR Financial to finance a proposal "that will exceed the amount available to creditors under the Ramudden offer," and the company prepared, executed and gave the trustee a holding proposal, asking that it be filed on October 26 "to avoid an automatic bankruptcy," per the Responding Motion Record of NTSM, director's affidavit sworn Oct. 26, 2026, paras. 33, 38–41.