Novelion: the end of QLT, and a discharge sought without the CRA's clearance

In December 2020, eleven months after Alvarez & Marsal Canada Inc. became its liquidator, Novelion Therapeutics Inc. still had more than 5,800 boxes of books and records in an off-site storage facility. Most of the records came from what the liquidator called the QLT period, the years before November 2016, when QLT Inc. changed its name to Novelion; over 3,800 boxes dated from before 2000. Reviewing the list with a former employee, A&M counted 5,300 boxes that could be destroyed at once and planned a lump-sum arrangement with the storage company for whatever had to outlast the company, per the First Report of the Liquidator, Dec. 9, 2020, paras. 4.1, 10.1–10.2.

On July 24, 2026, six and a half years after A&M's appointment, Mr. Justice Morishita of the Supreme Court of British Columbia discharged A&M as liquidator, on hearing its counsel "and no one else though duly served," per the Order Made After Application, July 24, 2026, p. 1 and para. 5. A&M applied without a final clearance certificate from the Canada Revenue Agency, which it had requested in May 2024. "To date, there has been no indication from the CRA on the timing of the final clearance certificate," the liquidator wrote on July 6, per the Fourth Report of the Liquidator, July 6, 2026, para. 7.1.

What was left after Aegerion

Novelion had stopped being an operating business before its liquidation began. Through Aegerion Pharmaceuticals, Inc., which became its subsidiary on November 29, 2016 in a merger involving QLT, it developed and sold treatments for rare diseases, per the proxy statement exhibited to the first affidavit of Michael Price, Novelion's chief financial officer and a director (First Affidavit of Michael Price, Nov. 14, 2019, para. 1 and Ex. A, pp. 6, 41). On May 20, 2019, Novelion, Aegerion, Dublin-based Amryt Pharma Plc and other parties signed a restructuring support agreement; Aegerion went through Chapter 11 in the Southern District of New York and on September 24, 2019 became a wholly owned subsidiary of Amryt. Novelion's intercompany secured loan to Aegerion was allowed in full, and in satisfaction Novelion received 2,807,975 Amryt American Depositary Receipts, each representing five Amryt shares, per the First Report of the Liquidator, Dec. 9, 2020, paras. 4.4–4.7.

The board's case for winding up was set out in that proxy statement, for a shareholders' meeting on November 5, 2019. Evercore had looked for a reverse merger or similar transaction, "however, no merger partner or other buyers were identified," and "Novelion does not have sufficient resources, operations or assets to continue as a stand-alone operating company," per the Proxy Statement, Ex. A to the First Affidavit of Michael Price, pp. 7, 46. The liquidation resolution needed two-thirds of the votes cast. It received 85.72%, with 11,748,306 shares for and 1,954,564 against, per the proxy statement and the scrutineer's report exhibited to the First Affidavit of Michael Price, Nov. 14, 2019, Ex. A, p. 6, and Ex. C, p. 126. The company told its shareholders it expected the liquidator to complete distributions by the fourth quarter of 2020, "subject to the resolution of claims," per the Proxy Statement, Ex. A to the First Affidavit of Michael Price, p. 53.

The liquidation ran under the British Columbia Business Corporations Act, with the court supervising. Mr. Justice Walker's order of January 9, 2020 approved the plan of liquidation, affirmed A&M's appointment effective January 16, stayed proceedings against the company, and granted a $200,000 charge securing the fees of the liquidator and of both sets of counsel, per the First Report of the Liquidator, Dec. 9, 2020, paras. 4.14–4.17 and the Liquidation Order, Jan. 9, 2020, p. 1. By the May 29, 2020 bar date, 12 proofs of claim had come in; nine claims were allowed and settled, for $494,408.95 in Canadian dollars or the equivalent, per the First Report of the Liquidator, Dec. 9, 2020, paras. 6.5–6.8. In February 2021, A&M told a US court that "all creditor claims have been agreed and paid in full," per the Verified Petition Under Chapter 15, Feb. 8, 2021, para. 1.

Three royalty streams, one without a buyer

Novelion also held royalties and potential revenue streams from technology it had sold before the liquidation: a punctal plug drug delivery system for ocular diseases, zuretinol products for inherited retinal disease, and Visudyne, "a light-activated drug used in photodynamic therapy." A&M opened a sales process on November 6, 2020, emailed 92 parties, advertised in The Globe and Mail and The Wall Street Journal, and set a December 15 deadline, per the Second Report of the Liquidator, Jan. 12, 2021, paras. 4.1–4.3. Mati Therapeutics Inc., which owned the plug system, had already agreed to a US$250,000 stalking-horse bid for its stream, and no other offer came in. The one offer for zuretinol came from Retinagenix Holdings LLC, formed by the product's co-developer, for US$5,000. The liquidator acknowledged the offer "is not of significant value" but recommended accepting it to "avoid a situation where select assets remain unsold," per the Second Report of the Liquidator, Jan. 12, 2021, paras. 4.2, 4.4–4.7. The court approved both releases on January 22, 2021, per the Fourth Report of the Liquidator, July 6, 2026, paras. 1.6–1.7.

Visudyne drew no bid. A party that surfaced after the sales process never made an offer, and "the current owner of Visudyne" told the liquidator it was not interested in buying the stream; A&M called it "not marketable at this time," per the Third Report of the Liquidator, July 29, 2021, paras. 10.1–10.3. On August 18, 2021, Madam Justice MacNaughton authorized Novelion and its liquidator to take no further steps to monetize its rights under an asset purchase agreement dated September 21, 2012, between Valeant Pharmaceuticals International, Inc., as purchaser, and QLT Inc. and QLT Ophthalmics, Inc., as sellers, per the Order Made After Application, Aug. 18, 2021, para. 10.

A medallion guarantee and a Chapter 15

In December 2020, A&M proposed handing most of the ADRs to shareholders in kind: one Amryt ADR for every nine Novelion shares, about 2.185 million ADRs in all, with holders of fewer than nine shares and the leftover fractions to be paid in cash at the end. Novelion's records showed 19,633,534 registered shares and 1,086 registered holders, of whom 488 would receive at least one ADR, per the First Report of the Liquidator, Dec. 9, 2020, paras. 8.4–8.9. The court approved the interim distribution on December 16, 2020, per the Fourth Report of the Liquidator, July 6, 2026, para. 1.5.

Before that order was granted, A&M had been told that the transfer agent for the Amryt ADRs required a "medallion guarantee." It explored various options and "was advised that the only avenue for the Interim Distribution to be completed" was Chapter 15 recognition, with a US court declaring the distribution order enforceable, per the Third Report of the Liquidator, July 29, 2021, paras. 5.3–5.5. As foreign representative, A&M petitioned in the Southern District of New York on February 8, 2021, telling the court the distribution "cannot be completed until Citi NY, which acts as transfer agent for the ADRs in the United States, has received a United States court order confirming that the Interim Distribution Order is enforceable in the United States," per the Verified Petition Under Chapter 15, Feb. 8, 2021, paras. 2, 33. Judge Michael E. Wiles recognized the BC liquidation as a foreign main proceeding on February 24, 2021 and directed Citi NY and all other entities to give effect to the distribution order, per the Final Order Granting Recognition, Feb. 24, 2021, paras. 2, 4. On March 11, 2021, 2.185 million ADRs went out, which the liquidator later described as approximately US$32 million worth, per the Third Report of the Liquidator, July 29, 2021, paras. 5.7, 9.6.