Ocean View Farms: after a DIP fight with its bank, a $5.35 million sale

Ocean View Farms milks its herd at Bay Bulls, on the southern shore of the Avalon Peninsula, about 30 kilometres south of St. John's. Richard Walsh, who owns the company with his wife, Marjorie, and their son, Darryl, swore on September 3, 2025 that it had been in business for 49 years. By his account it owns 4,303 litres a day of fluid milk quota, filled by a herd of 170 cows, raises its own replacement animals, farms 660 acres, most of them leased, and received Lactanet awards in 2022 and 2023 that put it among the top 1% of dairy herds in Canada. The farm, he swore, "comprises 15-20% of the island dairy supply," per the Affidavit of Richard Walsh, Sept. 3, 2025, paras. 5, 7, 10–11, 20, 38.

On July 30, 2026, Justice Alexander MacDonald of the Supreme Court of Newfoundland and Labrador approved the sale of the company's assets to 100322 Newfoundland and Labrador Inc. for $5,350,000 and directed the monitor, once the sale completes, to pay $4,500,000 to The Bank of Nova Scotia, per the Approval and Vesting Order, July 30, 2026, paras. 2–3, the Interim Distribution and Stay of Proceedings Order, July 30, 2026, para. 2 and the purchase agreement in the Seventh Report of the Monitor, July 29, 2026, App. C, s. 3.1. For the first three months of the proceeding, the company and that bank fought over who would fund it.

The farm and its bank

By Mr. Walsh's account, the company cut its investment in 2023 and 2024, which meant feeding the cows more grain at higher cost to hold production, and the family took on more of the day-to-day management to save on labour, which "caused a temporary lapse in our attention to administrative matters including our reporting to BNS." The bank told the company in September 2024 that it no longer wanted it as a client; the company began a Farm Debt Mediation process that November, and the bank issued a notice of intention to enforce its security under s. 244 of the BIA, per the Affidavit of Richard Walsh, Sept. 3, 2025, paras. 32–34. On August 27, 2025, the proposed monitor, S.R. Stack & Company (2023) Ltd., was told the bank had placed a hold on the company's account, per the Pre-Filing Report of the Proposed Monitor, Sept. 10, 2025, para. 26.

The bank's side came from Allison Henning of its special accounts management group. The company had been in breach of its debt service ratio covenants since December 2022, had asked for an interest-only accommodation in October 2023, and had made no principal repayments since. On September 8, 2025 it owed the bank $7,622,148.42, which Ms. Henning put at more than 95% of its total indebtedness, per the Affidavit of Allison Henning, Sept. 9, 2025, paras. 1, 9, 11, 30.

Two term sheets for $500,000

The company filed on September 4, 2025, asking the court to appoint Stack as monitor and Resolve Advisory Services Ltd. as chief restructuring officer and to approve a loan from Libra Finance Company Inc. secured by a charge ahead of the bank's security. The bank answered on September 9 by asking the court to dismiss the application: it had not sought a receiver, would consent to a stay under s. 69(2)(b) of the BIA for a notice of intention, and was willing to lend, so relief under the CCAA was "unnecessary and inappropriate." Failing that, it wanted Janes & Noseworthy Limited as monitor, no chief restructuring officer, and its own term sheet "exclusive of any other interim financing," per the Interlocutory Application, Sept. 9, 2025, paras. 1.2–1.4, 3–5. Its rate, Ms. Henning swore, was a fixed 10%, against Libra's 11.50%, the Bank of Canada rate of 2.75% plus 8.75%, with the same 3% commitment fee, per the Affidavit of Allison Henning, Sept. 9, 2025, para. 34.3.

The initial order of September 11 appointed Stack and Resolve, with a $100,000 administration charge, per the Seventh Report of the Monitor, July 29, 2026, para. 1. By the bank's later account, it agreed at that hearing to an initial order and the company's nominated monitor on the basis that it could offer financing on Libra's terms, which it understood would be approved on September 15. Its revised term sheet matched Libra's except for a lower rate, and both contained provisions requiring the lender's approval for certain transactions and steps in the proceeding, which the bank called the Approval Rights. On September 15, "contrary to the Bank's understanding of the arrangements that concluded the prior hearing," the company opposed the bank's financing, and the court approved Libra's, per the Application for Leave to Appeal, Sept. 24, 2025, paras. 2–3. The charging order authorized up to $500,000 from Libra, $150,000 of it pending an amended initial order, and ranked the DIP Lender's Charge behind the administration charge and ahead of existing security, per the Charging Order, Sept. 15, 2025, paras. 2, 8.

On September 24 the bank sought leave from the Court of Appeal. It argued that the judge had not considered whether the priority charge materially prejudiced the bank, as s. 11.2(4)(f) of the CCAA requires, and had treated the Approval Rights "as an automatic disqualifying factor." "There is limited appellate case law on competing interim financing proposals," the application said, and whether an existing secured creditor may be granted contractual approval rights in a CCAA proceeding "is important for the insolvency practice generally," per the Application for Leave to Appeal, Sept. 24, 2025, paras. 4.1–4.2, 5.2.

Approval rights, by consent

On November 14, after the company circulated a draft sale process less than 24 hours before a hearing, the bank's counsel wrote that on the projections in the monitor's first report the company would use $450,000 of the $500,000 loan by December 12. "SISP approval should not wait another 30 days," the letter said, per the Letter from Cox & Palmer to the Court, Nov. 14, 2025, pp. 1–2. O'Keefe & Sullivan, for the company, replied that given "the Bank's aggressive posture at the last DIP approval (including the related appeal of this Court's decision)," the company was "not comfortable seeking DIP financing from the Bank," per the Letter from O'Keefe & Sullivan to the Court, Nov. 14, 2025, p. 2.

By November 19 the company had told O'Keefe & Sullivan it would not continue as counsel, and the monitor warned it would consider a material adverse change report if new counsel was not found in a timely manner. The same report objected to the bank's edits to the draft sale process, which "undermine the Monitor in its role and provide the Bank of Nova Scotia with a veto over the process," per the Second Report of the Monitor, Nov. 19, 2025, paras. 11, 19, 24. The process the court approved on November 26 had the monitor identifying the successful bid "in consultation with the Company, the DIP Lender, and BNS," per the Sale and Investment Solicitation Process Order, Nov. 26, 2025, Sched. A, para. 31.

On December 11 the company, now represented by Curtis Dawe, moved to borrow $500,000 from the bank and pay out Libra. The draft order was "the result of various compromises, concessions and, even in certain instances, changes of position between the Applicant and the Bank," its notice of motion said, and would "result in the appeal being discontinued." It added: "The Applicant previously took express issue with certain approval rights proposed in the Bank DIP Loan. Those approval rights remain in the current Draft Order." The company was now satisfied with them "as a result of the ongoing discussions and compromises of the parties in relation to other matters," per the Notice of Motion, Dec. 11, 2025, paras. 4, 6–7. The bank's position statement said the same provisions were in Libra's agreement, that this time the company was agreeing to them, and that the court had approved comparable terms for existing secured creditors acting as DIP lenders in the Canada Fluorspar, Harbour Grace Ocean Enterprises and Karwood Contracting proceedings, per the Bank of Nova Scotia Position Statement, Dec. 12, 2025, paras. 2–5.