Paystone: the owners want to buy it back, and BDC got a few hours' notice

Justice Myers granted Paystone Holdings Inc. and its affiliates an initial order under the CCAA on June 5, 2026. The applicants met the formal requirements: each operates or has assets in Canada, is insolvent, and has more than $5 million in debt, per Endorsement of Justice Myers, June 5, 2026, para. 1.

The stay runs ten days. Almost everything else in the two-page endorsement is a reservation.

Who owns the debt, and who wants the business

Two facts, stated in consecutive paragraphs, set up everything that follows.

The applicants recently restructured their senior debt. Their former lending syndicate sold their positions at a significant discount to Sandton, in light of the applicants' inability to pay, per Endorsement, June 5, 2026, para. 2.

And the applicants intend to move at the comeback hearing on June 15 to approve a sale of the business to a company controlled by its current ultimate owners. The buyer proposes to assume the new senior debt and leave the applicants' subordinated secured debt, unsecured notes, and much of their trade debt stranded and unpaid, per Endorsement, June 5, 2026, para. 3.

Neither of those is improper. A syndicate selling at a discount to a fund that specialises in distressed positions is an ordinary secondary-market event, and it is often what makes a restructuring possible — a lender that has already written down its position can accept an outcome the original holder could not. A sale to existing owners, structured around assumed senior debt, is likewise a recognised shape.

But stated together, in the endorsement's own sequence, they describe a transaction in which the people who owned the business before will own it afterward, the debt that survives is debt bought at a discount, and the constituencies who lose everything are the ones ranking below.

That is precisely the transaction a court examines most carefully, and it is why the rest of the endorsement reads as it does.

The notice passage

The applicants gave a few hours' informal notice of the first-day hearing to BDC, the subordinate secured creditor — one of the parties whose debt the proposed sale would leave unpaid.

Justice Myers' response is the most useful paragraph in the endorsement, and it is worth quoting nearly in full:

I know that the CCAA allows hearings without notice. But where it is obvious that a party with a significant interest will be materially affected by a proceeding, the Applicants ought to have done better. What prejudice could notice have caused? The only person who suffers from a raucous hearing is the judge who has to listen and then write more than might otherwise be required. Perhaps BDC might have objected to a sale approval hearing being brought back so soon. But by not giving it notice (and I do not count today's email as effective notice) isn't BDC's position on timing stronger?

Per Endorsement, June 5, 2026, para. 4.

Three things are being said, and each is worth separating out.

The statutory permission is not the standard. Section 11 of the CCAA lets a court proceed without notice. That the Act permits it does not mean a debtor should do it to a party it knows will be materially affected.

The cost of notice falls on the wrong person's convenience. The only downside identified is that the hearing would take longer and the judge would write more — which is to say, the reason not to give notice was not prejudice to anyone but inconvenience to the applicants and the court.

The tactic is self-defeating. The objection the applicants might have been avoiding — that the sale approval hearing was being brought back too soon — is now a stronger objection than it was, because BDC can say it was not told. A short notice period is an argument against an accelerated timetable. Depriving a creditor of notice supplies it with the argument.