Sequent AI: the credit bid that assumes the debt

The company at the top of this receivership had already stopped trading when the receiver arrived. Sequent AI Ltd. was incorporated in Ontario on September 27, 2021, kept a registered office at 161 Bay Street in Toronto, and was in the business of owning and supporting companies that resold information technology hardware and software to Canadian buyers; it ceased operations in or around March 2026, the majority of its employees were terminated as of March 1, and by the date of Cortland's application it employed one individual, per the Affidavit of Deepak Alappatt, Apr. 2, 2026, paras. 5, 7, and Ex. "A", p. 39 and the First Report of the Receiver, Apr. 28, 2026, para. 2.1.1. The two companies beside it in the style of cause had never carried on a business at all. Sequent AI ExchangeCo Ltd. and Fulcrum Stoneworks ExchangeCo Ltd. are holding companies, and between them they hold the shares of two operating businesses that nobody asked the court to put into receivership.

Those businesses are Stoneworks Technologies Inc., an Ottawa information technology solutions provider that the receiver describes as delivering "end-to-end infrastructure solutions, including cloud, data centre, cybersecurity, artificial intelligence and managed IT services" to a customer base including government, defence and enterprise clients; and P J S Systems Inc., of Burnaby, British Columbia, which specializes in corporate audio-video integration. Stoneworks Technologies had about 24 employees and PJS about 25, per the First Report of the Receiver, Apr. 28, 2026, paras. 2.1.3, 2.1.6 and the Affidavit of Deepak Alappatt, Apr. 2, 2026, paras. 17, 19. PJS keeps its own financing arrangements, and each operating company has its own management; both continued in the normal course while the receivership ran above them, per the First Report of the Receiver, Apr. 28, 2026, para. 2.1.7.

Of the two, Stoneworks Technologies is by some distance the larger. On preliminary unaudited figures given to the receiver, it generated revenue of approximately $179 million and EBITDA of approximately $23 million in the three months ended March 2026, against revenue of approximately $98.3 million and EBITDA of approximately $2.7 million for the year ended December 31, 2025. The receiver sets a caution beside those numbers: management told it the business is highly seasonal, with much of the year's revenue and profitability historically earned in the first quarter, as government and institutional customers deploy budgeted capital before a March 31 fiscal year end, so "first quarter performance is not necessarily indicative of full-year results." PJS has historically run EBITDA of approximately $0 to $1 million and is "not considered a core driver of enterprise value relative to Stoneworks Technologies," per the First Report of the Receiver, Apr. 28, 2026, paras. 2.1.4–2.1.6.

Seven amendments, then a demand

Cortland Credit Lending Corporation is agent for a group of lenders that includes Cortland Credit Strategies LP and Cortland Credit Institutional LP. Under an amended and restated credit agreement dated June 29, 2023, the lenders extended a facility to Sequent AI Ltd. in the total commitment amount of $41,000,000, guaranteed by the two ExchangeCos and by five other companies in the group, including both operating entities. The agreement was amended seven times between October 6, 2023 and February 12, 2026, and its maturity was pushed out to June 30, 2026, per the Affidavit of Deepak Alappatt, Apr. 2, 2026, paras. 27–31.

The defaults listed in Cortland's evidence run back further than the amendments. They include failing the required interest coverage ratio and the required debt-to-EBITDA ratio for several reporting months from January 2024 to August 2025; failing to deliver audited financial statements for fiscal 2023 and 2024; no reporting at all from the borrower since August 2025; payments to two Tantiv4 entities said to breach three covenants and never converted into a secured loan as a 2025 amendment required; the issue of Stoneworks Technologies shares to that company's voting shareholder without Cortland's consent; and a payment default of approximately $116,000 in unpaid expenses, per the Affidavit of Deepak Alappatt, Apr. 2, 2026, paras. 46–47. The debtors engaged Chris Rankin as a restructuring advisor in late 2025 and explored options including selling entities within the group, but the defaults were not cured and no plan was advanced, per the Affidavit of Deepak Alappatt, Apr. 2, 2026, paras. 23, 51.

Cortland issued demands on March 12, 2026 to the borrower, to four of the guarantors including both ExchangeCos, and to the individual who holds the voting shares of Stoneworks Technologies and had pledged them, each with a notice of intention to enforce security under s. 244(1) of the BIA and a payment deadline of March 23. Key directors and officers of the debtors signed resignations dated March 23, and on April 2 the debtors executed and returned consents to enforcement, per the Affidavit of Deepak Alappatt, Apr. 2, 2026, paras. 25, 52–59. The indebtedness stood at $39,779,089.64 as at March 31, 2026, inclusive of principal and interest to March 12 and exclusive of everything accruing after, per the Endorsement of Justice Black, Apr. 17, 2026, para. 8; by the date of the receivership order it had come down to approximately $32 million, per the First Report of the Receiver, Apr. 28, 2026, para. 2.2.1, n. 1.

Justice Black appointed KSV Restructuring Inc. receiver and manager of all three companies on April 17, 2026, on an unopposed application the debtors had consented to, weighing the factors collected by Osborne J. in iSpan Systems LP, 2023 ONSC 6212, per the Endorsement of Justice Black, Apr. 17, 2026, paras. 10–14. The order gives the receiver and its counsel a first-ranking charge on the property for their fees and lets the receiver borrow up to $250,000 on a charge ranking behind it, per the Order Appointing Receiver, Apr. 17, 2026, paras. 17, 20. At the receiver's request the judge booked a sale-process hearing for May 5 at noon, for one hour, per the Endorsement of Justice Black, Apr. 17, 2026, para. 15.

Five weeks, 103 names, two letters

Justice Black approved the sale and investment solicitation process on May 5, accepting the receiver's description of it as a "straightforward, one-phase process designed to maximize the value of the Property for the benefit of all stakeholders," and noting that Stoneworks Technologies depends on relationships with key customers, is not subject to long-term contracts, "and is thus sensitive to insolvency proceedings." Following iSpan, he was "not inclined to second-guess the considered recommendations of the experienced and expert Receiver," per the Endorsement of Justice Black, May 5, 2026, paras. 2, 6, 14.

The process was designed to give bidders five weeks. It did not start on time: the receiver had difficulty obtaining key materials about the operating entities, which sit outside the receivership, "chiefly because of the temporary unanticipated absence of the principal of Stoneworks Technologies," whose input the receiver considered necessary to build marketing materials and populate the data room. The bid deadline moved from June 12 to July 21 so that the five weeks would run from the actual launch on June 16, per the Second Report of the Receiver, July 31, 2026, paras. 3.0.4–3.0.6. Mid-process, the receiver itself changed names: effective June 1, 2026, under an order of June 3, AlixPartners Restructuring, Inc. was substituted for KSV Restructuring Inc., with the professionals on the mandate unchanged, per the Second Report of the Receiver, July 31, 2026, para. 1.0.1, n. 1.