National Traffic Safety: a receiver to sign, or a proposal to vote on

On October 27, the day after National Traffic Safety Management Inc. filed a holding proposal, counsel for its secured lender, Oxygen Working Capital Corp., wrote to the company's counsel: "We are hereby putting your client on formal notice that your client has been and is currently in breach of the Forbearance Agreement and that any and all cure periods have long expired." The letter declares "the Forbearance Period is terminated," per the Oxygen affidavit, Oct. 30, 2026, Ex. "I". Three days later Oxygen filed a motion for the November 2 hearing. It asks the court, if necessary, to lift the stay, to approve the sale of substantially all the company's assets to Ramudden Global (Canada) Inc. under an asset purchase agreement dated October 21, to appoint TDB Restructuring Limited as receiver of certain assets "for the limited and sole purpose of entering into and completing" that agreement, and to vest the assets in Ramudden, per Oxygen's Notice of Motion, Oct. 30, 2026, relief (b)–(e).

Oxygen's chief executive swore the affidavit in support of the proposal trustee's own motion to approve the Ramudden sale and, "In the alternative," of Oxygen's application for a receiver, per the Oxygen affidavit, paras. 1–3. The company filed its own motion on October 29, for approval of a $500,000 interim loan from COR Financial Corp. and a charge to secure it, and put in evidence an amended proposal under which its existing shares would be cancelled and new ones issued to A2 Environmental Group Inc., the company of its sole officer and director, per the company's Notice of Motion, Oct. 29, 2026, para. 1(b), grounds paras. 6, 29. Local 837 of the Labourers' International Union of North America, which says it represents about 49 of the company's current active employees, put in sworn evidence on October 30 in support of the Ramudden sale, per the Local 837 affidavit, Oct. 30, 2026, paras. 1–2. When the case was reported here on October 28, the court had just set aside two hours on November 2, from 11:00 a.m., per the Endorsement of Dietrich J., Oct. 26, 2026, para. 7. That hearing has not yet been held.

A receiver with one task

Oxygen's loan agreement for an $800,000 term loan, its factoring agreement and its general security agreement over all the company's personal property are all dated April 28, 2025. The company defaulted on April 15, 2026, Oxygen's chief executive deposes, and filed its second notice of intention nine days later. A forbearance agreement of June 12 kept Oxygen factoring and holding off enforcement, and was later extended so the company could seek approval of a sale to A2, per the Oxygen affidavit, paras. 9–11, 14, 17–18.

The draft order Oxygen filed would appoint TDB under s. 243(1) of the Bankruptcy and Insolvency Act and s. 101 of the Courts of Justice Act, as receiver of the purchased assets defined in the Ramudden agreement and their proceeds, "for the sole and limited purpose of entering into the Ramudden APA on behalf of the Debtor, and completing the sale of the Purchased Assets to Ramudden." It would empower the receiver "to enter into and sign the Ramudden APA" for the company. Oxygen's notice says TDB has consented to act, subject to a receivership order on the terms of that draft, per Oxygen's draft receivership order, paras. 2–4, and Notice of Motion, ground (x).

The financing behind the company's plan is a commitment letter from COR dated October 26, which the company gave Oxygen on a confidential basis; the letter itself is not in the record. Oxygen's affidavit calls the financing "highly uncertain," saying the letter provides that COR "may decline to proceed with the financing at its sole discretion" and that the financing "remains conditional upon satisfaction of various outstanding due diligence items." Its counsel's October 27 letter quotes paragraph 11 of the commitment letter, under which the lender, "at its sole discretion and without liability to the borrower, the guarantor or any other person," may "decline to proceed with the facility," and calls the document "in essence a Term Sheet and not a firm commitment," per the Oxygen affidavit, paras. 28–29, Ex. "I". By contrast, Oxygen's affidavit says, the Ramudden offer "is unconditional, with the exception of the issuance of an Order of the Court approving the transaction and vesting title in Ramudden," and "does not require Oxygen to subordinate its security position." Ramudden, the affidavit says, will continue to employ all unionized employees on the terms of the collective agreement, per the Oxygen affidavit, paras. 33, 35.

A charge in fifth place

The company's motion is for Tranche A of COR's facility, a $500,000 DIP loan which, the director's affidavit of October 29 says, "will be utilized to fund the post-filing amounts owed to the Union and keep the payments to the Union current"; a footnote puts the post-filing vacation pay and pension arrears owed to the union at about $385,000. The loan is conditional on court approval and on a $500,000 charge, "which charge shall be subordinate to Oxygen and the Administration Charge." The company's cash flows, as projected with the holding proposal, "are otherwise sufficient to fund its operations during this proceeding," and no stakeholder is prejudiced "as all other post-filing creditors are being paid in the ordinary course of business," per the director's affidavit, Oct. 29, 2026, paras. 7–9, n. 2.

The company's draft order ranks the DIP Charge "in priority to all other security interests" and other encumbrances, then sets out its place "in relation to the Administration Charge and Oxygen's security interests": first, Oxygen's interest in the company's factored receivables; second, the Administration Charge of $80,000; third, Oxygen's other security interests, including its security for the term loan; fourth, the Additional Administration Charge of $220,000; and fifth, the DIP Charge of $500,000, per the company's draft order, para. 6.

In the affidavit sworn for October 26, on which the company also relies, the director said Oxygen "would not agree to have its security primed, except to the limited extent of an administration charge in the amount of $50,000, which was subsequently increased to $80,000." Without a priming DIP charge, that affidavit says, the company could not secure DIP financing, and it "used post-filing HST and pension remittances to fund working capital," intending that all such amounts be paid on the closing of the director's purchase, per the director's affidavit, Oct. 26, 2026 (Tab 2), para. 28. Oxygen's notice of motion, dated the day after the company's, says Oxygen "will not agree to having its security primed by a DIP financing charge." Its affidavit says the commitment letter contemplates a charge on all the company's assets to secure advances for post-proposal obligations "which the Company failed to pay," and that Oxygen will not agree to a DIP charge "which ranks in priority to Oxygen's security," per Oxygen's Notice of Motion, ground (q), and affidavit, para. 30.

The amended proposal

Tranche B, the director's affidavit says, "will be used to fund a proposal to the Company's creditors," and its availability is conditional on the creditors and the court approving the amended proposal. That proposal, attached to the affidavit, "contemplates a lump sum payment of $3 million, plus any unused balance of Tranche A to fund the proposal to the creditors," together with the cancellation of all existing common and preferred shares and "the issuance of new shares to A2 for no additional consideration," per the director's affidavit, Oct. 29, 2026, paras. 10–11. The company said it intended to file the proposal before the hearing; Oxygen's notice says it was filed on October 29, per Oxygen's Notice of Motion, ground (p).