Olive Branch: the June sale that never closed

Olive Branch is a 31,000-square-foot kosher supermarket in the Promenade Shopping Centre in Thornhill, Ontario. It opened in October 2024 and employs about 150 people, according to the interim receiver's Fourth Report of September 18, 2026. In June the court approved its sale to 4798670 Nova Scotia Limited, "an entity affiliated with" the principal of the store's general partner, at a price set to pay the store's lender in full. That sale never closed. Over the summer the closing date moved three times, and $3,750,000 in deposits was forfeited. On August 6 the interim receiver terminated the agreement. The replacement, signed on September 11, sells substantially the same business to Kosher Grocers Inc., a party related to the lender, for $4,850,000 with no deposit, per the Fourth Report of the Interim Receiver, Sept. 18, 2026, s. 1.0, paras. 11, 13; s. 2.1, paras. 2–3; s. 5.0, para. 3.

The debtors are PerfectKo Limited Partnership, which owns the store, and its general partner, PerfectKo GP Inc. The sole secured creditor is 770 Corp., which lent $12.5 million under a commitment letter of July 11, 2024, taking a general security agreement, a guarantee from the general partner and an unlimited personal guarantee from its principal. The debtors now owe it approximately $14.2 million, per the Third Report of the Interim Receiver, June 9, 2026, s. 3.1, paras. 2–3, 5.

Nine months of disputed timing

770 Corp. sent its default notices and notices under s. 244(1) of the BIA on December 19, 2025, and applied for a receiver. The debtors opposed. Their factum called the store "a viable going concern" and said the application was "premature and/or tactical," and it asked in the alternative for an adjournment to carry out a stabilization and funding plan. In the debtors' account the build-out ran over budget: a project first costed at $12,000,000 grew to $18,000,000, and short-term bridge loans kept the contractors on site in the spring of 2024, per the Responding Factum of the Respondents, Dec. 23, 2025, paras. 1, 4–6, 9–13.

On December 24, on consent, Justice Cavanagh appointed KSV Restructuring Inc. interim receiver under s. 47(1) of the BIA until February 15, 2026. The court officer could borrow up to $1 million at 12 per cent. The general partner's two directors were barred from managing the business during that period, and the debtors consented to a full receivership on February 15 unless the loan was repaid by then, per the Endorsement of Justice Cavanagh, Dec. 24, 2025, paras. 1, 3, 5. The loan was not repaid, and the debtors sought a 90-day adjournment to refinance, per the Fourth Report, s. 1.0, para. 5. Justice Black kept the court officer as an interim receiver, raised its borrowing limit to $1.3 million, and let it design a sale process but not yet run one. "There is a (roughly) year-and-a-half long history to this matter," he wrote, "and some disagreement, to varying degrees, about the details and import of various events in that history," per the Endorsement of Justice Black, Feb. 17, 2026, paras. 2, 5–6, 12.

In March the debtors asked for 75 days of exclusivity to refinance before any sale process began. Justice Black refused. The principal had not identified the investors he said he was in contact with, and the judge wrote that "in the absence of any information from or about these supposed potential investors, I am not prepared to put much weight on the likelihood that such unnamed third parties are in earnest." He also declined to rely on a report from Fuller Landau, the debtors' financial advisor, which he found "in the nature of conclusory statements," per the Endorsement of Justice Black, Mar. 5, 2026 (released Mar. 9), paras. 5, 20–21, 31. The same endorsement recorded that GMBR Capital Corp., a limited partner that had invested approximately $2.9 million, wanted certain non-arm's length transactions investigated. The interim receiver proposed to defer any such investigation until the sale process had run its course, and GMBR agreed, per the Endorsement of Justice Black, Mar. 5, 2026, paras. 46–49.

One qualified bid

The interim receiver's buyers list had 43 strategic parties and 75 financial parties, and trade publication Canadian Grocer sent two email blasts to its subscribers. Six parties signed non-disclosure agreements. By the April 28 bid deadline there were two bids. One "would have resulted in a significant shortfall in respect of the amount owing to 770 Corp." and was not treated as a qualified bid. The other came from the numbered company affiliated with the principal. It offered the lesser of $15,250,000 and the amount needed to repay the debtors' indebtedness in full, with a $1,500,000 deposit, per the Third Report of the Interim Receiver, June 9, 2026, s. 4.0, para. 6; s. 4.1, para. 1; s. 5.0, para. 2.

The only objection to that deal came from GMBR and 4515770 Nova Scotia Company, limited partners who together had invested close to $4 million. The sale would leave nothing for their equity. Their factum said they intended to bring claims against the principal, and that the agreement's transfer of "all causes of actions (sic) and claims" could be read to carry those claims to his company. Those claims are allegations in a factum and have not been tried, per the Factum of GMBR Capital Corp. and 4515770 Nova Scotia Company, June 16, 2026, paras. 1, 3–5, 11–14. The parties agreed on language before the hearing. On June 17 Justice Black granted the approval and vesting order. Paragraph 3 of the order says the debtors' own claims pass to the buyer and the personal claims of unit holders do not. The judge found that the transaction satisfied the Soundair principles, per the Endorsement of Justice Black, June 17, 2026, paras. 2–3, 5–10 and the Approval and Vesting Order, June 17, 2026, para. 3. A distribution order made the same day authorized payment of the sale proceeds to 770 Corp.

Three extensions and a forfeit

The Fourth Report sets out what followed. The outside date was June 30. At the buyer's request, a first amendment dated June 26 moved it to July 13, and the buyer arranged $350,000 in bridge financing for the store's expenses and the costs of the proceeding. A second amendment dated July 10 moved it to "July 29, 2026, which shall not be extended." That extension was conditional on a further $2 million deposit and $200,000 more in bridge financing by July 13, per the Fourth Report of the Interim Receiver, Sept. 18, 2026, s. 4.0, paras. 1–3. The buyer could not pay the additional deposit by July 13. The interim receiver, in consultation with 770 Corp., extended the deadline to July 15 by an acknowledgement dated July 14, and the $2 million reached Bennett Jones on July 14, per the Fourth Report, s. 4.0, paras. 5–7.

On July 29 the buyer was unable to fund the cash balance of the purchase price, "due to what it advised was an administrative matter facing its lender." Its financial advisor, Fuller Landau LLP, asked for more time. A third amendment effective July 29 set a final outside date of August 5. Under it the $3.5 million already on deposit became the interim receiver's property at once as liquidated damages, to be credited against the price only if the deal closed by August 5. The extension also required written evidence from Wide Range Capital, which the report calls the buyer's "purported lender," of committed funds, plus a further $250,000 deposit and $150,000 in bridge financing by July 31. The payments arrived on time, per the Fourth Report, s. 4.0, paras. 8–12. The cash balance did not, and closing did not occur by August 5. Bennett Jones's notice of August 6 terminated the agreement "without any cure period" and confirmed that the $3,500,000 deposit and the $250,000 final deposit had become the interim receiver's property, per the Fourth Report, s. 4.0, paras. 14–16, App. "O".

The new agreement

The interim receiver then went to 770 Corp. The lender said it would bid for substantially all of the business and was "not prepared to fund, or see its collateral eroded to fund, a further sale process," given the results of the first process, the lack of other interested parties since it ended and the store's continued underperformance. Kosher Grocers Inc. submitted a bid with a draft agreement. The report describes the negotiation that followed as "arm's length," and the agreement was signed on September 11, per the Fourth Report, s. 5.0, paras. 1–2.

The price is $4,850,000, with no deposit. The debtors' cash is excluded, including the forfeited $3,750,000, and so is the senior secured debt. Kosher Grocers takes on the payables incurred since December 24, 2025 with the interim receiver's approval, except those for construction, capital works and professional services and any amount owing to Re-Con Retail Construction Inc. It must hold kosher certification from the Kashruth Council of Canada (COR), or another agency acceptable to it, by closing. It may offer employment to the employees it chooses, on terms no less favourable in the aggregate, and says it intends to offer employment to substantially all employees needed to run the business. Gift cards and store credit stay with the debtors, although the buyer may honour them. Closing is ten business days after approval, and the outside date is October 30, 2026, per the Fourth Report, s. 5.0, para. 3.

The interim receiver gives twelve reasons for recommending the deal. Among them: the second bid in the sale process offered less. Since the termination it "has not received any credible assurance" that the original buyer could close or satisfy the debt. There is "no executable alternative transaction that is acceptable to 770 Corp.," and the lender will not provide more operating capital unless the sale is approved, per the Fourth Report, s. 5.1, para. 1(b)–(d), (g)–(h), (l).

The business has kept losing money under supervision. The report puts its 2025 operating loss at approximately $1.6 million and its net loss after interest at approximately $3.6 million. For the seven months to July 31, 2026, the operating loss was approximately $600,000 and the net loss approximately $1.7 million, before the fees of the interim receiver and its counsel. Canada Revenue Agency's letter of May 20 puts pre-filing HST at $259,507, which the interim receiver expects to be paid. The report says 770 Corp. "will incur a substantial shortfall" and that nothing will be left for creditors ranking after it, per the Fourth Report, s. 2.2, para. 4; s. 3.1, para. 2; s. 3.2, para. 1; s. 6.0, para. 2.

The court officer now carries a different name. By an order dated June 3, AlixPartners Restructuring, Inc. replaced KSV Restructuring Inc. as court officer effective June 1, with the same professionals on the mandate, per the Fourth Report, s. 1.0, para. 1 n. 1.

October 6

The motion is returnable on October 6, 2026 at 12:00 p.m. before Justice J. Dietrich, by videoconference. The interim receiver seeks a new approval and vesting order that approves the September 11 agreement nunc pro tunc, vests the purchased assets in Kosher Grocers and relieves it of its remaining duties under paragraphs 3 to 8 of the June order. The motion also asks to amend the interim receivership order to authorize, but not require, the filing of certain partnership information and tax returns. A second order would authorize distributions to 770 Corp. from cash on hand, including the forfeited deposit, up to the full indebtedness after an administrative reserve, and would shield the interim receiver from personal liability under the listed tax statutes for making them, per the Notice of Motion of the Interim Receiver, Sept. 18, 2026, pp. 1–3, paras. 1–2. The interim receiver says it is not aware of any objection to the distributions, per the Fourth Report, s. 6.0, para. 3(f).