National Traffic Safety: the trustee holds to Ramudden

On October 31, two days before the competing motions in National Traffic Safety Management Inc.'s proposal proceeding come before the court, the proposal trustee, TDB Restructuring Limited, answered the company's case and held to the sale it had asked the court to approve in its Seventh Report of October 23. Its First Supplement to the Seventh Report says the trustee "remains of the view" that the sale of substantially all of the company's business and assets to Ramudden Global (Canada) Inc. "represents, in all the circumstances, the best outcome for the stakeholders," and asks the court to grant the relief in the trustee's own motion, "including approval of the Ramudden transaction and the granting of the proposed Approval and Vesting Order." Ramudden's binding offer expires on November 4, the report says, and the trustee "already has a significant deposit on hand," per the Supplement to the Seventh Report, Oct. 31, 2026, paras. 1, 3, 10, 17, 55(a), 59.

The report answers the motion record the company served on October 29: a request for approval of a $500,000 interim financing facility from COR Financial Corp., and an amended proposal under which the company's existing shares would be cancelled and new ones issued to A2 Environmental Group Inc., which the report describes as controlled by the company's sole officer and director, "resulting in A2 acquiring 100% of the Company's equity," per the Supplement to the Seventh Report, paras. 6, 10, 14–15. When the case was reported here on October 31, the trustee's report was not yet in the record.

The sale process, as the trustee tells it

The report begins with the process the trustee ran "with the direction of the Court and the support of the Company," after other prospective purchasers had expressed interest. Competing offers arrived on October 16; the trustee gave the interested parties a chance to improve them, and A2 submitted an amended offer. Having weighed "the total consideration, assumed liabilities, execution risk and anticipated recoveries to creditors," the trustee found Ramudden's the most favourable outcome. "Following that determination, and with the benefit of having seen the full terms of the Ramudden LOI," the report says, the company, under the director's direction, opposed the Ramudden transaction and elected to pursue the amended proposal instead, per the Supplement to the Seventh Report, paras. 18–21.

The trustee recognizes the company's right to file a proposal under the BIA, and that any alternative "must ultimately be considered on its merits." It "has concerns regarding the circumstances in which the Amended Proposal has been advanced": the director, as the company's sole officer and director and A2's controlling principal, is directing the company to pursue a transaction that would result in A2 acquiring ownership of the company, after A2 was unsuccessful in the sale process. "In the Proposal Trustee's view, permitting a related-party 'bitter bidder' to pursue an alternative transaction through its control of the debtor after being unsuccessful in a Court-sanctioned competitive sale process, compromises the fairness and integrity of the sale process, and the reasonable expectations of other participants who submitted offers in accordance with that process," per the Supplement to the Seventh Report, paras. 22–23. The company's position, in the director's October 26 affidavit, on which it relies for November 2, is that the court "should not approve Ramudden's offer at this time and should instead allow creditors the opportunity to consider and vote on the Company's proposal," per the director's affidavits, Oct. 26, 2026 (Tab 2), para. 42, and Oct. 29, 2026, para. 3.

The same October 26 affidavit says that in September the company prepared an asset purchase agreement with A2 that "contemplated a stalking horse sale process and provided a break fee in the event that it was not the winning bidder to reimburse A2 for the amount that it advanced for working capital to keep the Company operational," and that the director understands the trustee was not prepared to support the process "because, among other things, there was insufficient time to properly expose the business for sale," per the director's affidavit, Oct. 26, 2026 (Tab 2), para. 31. Timing was a consideration, the trustee replies, but its "primary concern" was the proposed $250,000 break fee and an additional expense reimbursement of up to $50,000. Having reviewed historical data on break fees in comparable insolvency sale processes, it was not prepared to support "these bidder protections, particularly in favour of a related-party purchaser," and its decision rested on its assessment of the overall terms of the proposed transaction, "including the above-market break fee and not on timing considerations alone," per the Supplement to the Seventh Report, paras. 24–25.

Funding the trustee says it cannot verify

The COR commitment letter is dated October 26, and, "[g]iven the confidential nature of the Commitment Letter," the trustee has not summarized its specific commercial terms. On October 28 the trustee's counsel asked for evidence of COR's financial capacity to provide the financing. As of the report, "no response or supporting documentation has been received from COR or its counsel," and the trustee has been unable to verify independently COR's financial capacity or the availability of the contemplated financing. Clause 12 of the letter, the trustee notes, permits COR, "in its sole discretion and without liability, to withhold, delay or decline funding where certain documentation or compliance requirements have not been satisfied." The trustee "does not believe that the Commitment Letter provides reasonable certainty that the financing required to support the Amended Proposal will actually be available," per the Supplement to the Seventh Report, paras. 26, 29–31, 33.

The director's October 29 affidavit says "There is no prejudice to any stakeholder from the approval of the DIP Loan and DIP Charge as all other post-filing creditors are being paid in the ordinary course of business," per the director's affidavit, Oct. 29, 2026, para. 9. That statement, the report says, "is not consistent with the information available to the Proposal Trustee, which understands that certain post-filing obligations, including amounts owing to professional advisors and trade creditors, remain unpaid." If the Ramudden transaction is not approved, the trustee is concerned that the company will keep operating and incurring obligations while its existing post-filing liabilities stay unpaid. If the amended proposal proceeds, it says, it is "possible, if not likely" that the company will keep incurring post-filing obligations it cannot pay in the normal course, so that creditors "including the Union and CRA" will "effectively finance the Company as involuntary unsecured creditors," per the Supplement to the Seventh Report, paras. 34–36, 55(f).