Starline Foods: a commitment letter, not a term sheet

Deloitte Restructuring Inc., receiver of Starline Foods Inc., an Abbotsford blueberry processor, is asking the Supreme Court of British Columbia to approve a sale and investment solicitation process for the company's property and to authorize a listing agreement for its land with Cushman & Wakefield ULC. The process would let the company, its shareholders or a related party propose a refinancing, on a condition set out in the receiver's first report, dated November 2, 2026: such a proposal would have to be "supported by an executed lender commitment rather than a term sheet or expression of interest," and tested against the market "on the same timeline and terms as all other bids," per the Receiver's First Report, Nov. 2, 2026, paras. 6, 25, 81.

The plant is a single-storey processing and cold storage building of about 29,500 square feet, built in or about 2017, at 33786 Clayburn Road, on a parcel the proposed sale process puts at about 30.26 acres, some 8 of them the facility and 22.26 more of agricultural land, in the Agricultural Land Reserve. Starline, incorporated in 2015, receives, grades, packs and individually quick freezes (IQF) blueberries there, buying principally from growers and processors in British Columbia and the United States and selling frozen and fresh berries to customers in both countries, fruit processors and food ingredient distributors among them (First Report, paras. 11–13 and App. B, Sched. B). Two individuals are listed as its directors; the receiver understands those two and a third individual to be its shareholders, and says a fourth managed day-to-day operations. The report calls the four the Principals (paras. 14–15).

Chief Justice Skolrood made the receivership order on June 25, 2026, on Bank of Montreal's application under s. 243(1) of the Bankruptcy and Insolvency Act and s. 39 of the Law and Equity Act, after hearing BMO's counsel, "no one else appearing, although duly served." It appoints Deloitte effective September 21, 2026, per the Receivership Order, June 25, 2026, pp. 1–2 and para. 1. It was made effective then, the receiver reports, "to allow the Principals additional time to refinance the BMO Facilities." On September 21 the receiver attended at the plant at about 8 a.m. but, by its account, only monitored the property, and took possession shortly after 4 p.m., "after the Court had heard and dismissed an application brought by the Debtor that day for a variation of the Receivership Order extending its effective date" (First Report, paras. 21–22). No order or endorsement from that hearing is in the record.

Seven extensions, and a term sheet

BMO's account of the years before is in an affidavit affirmed on April 22, 2026 by one of its account managers. In or around October 2021, it says, the bank moved Starline's accounts to its special accounts management unit over concerns that included operating losses, unreliable information management systems, weak financial controls, a dispute among the shareholders and certain related party transactions (BMO affidavit #1, Apr. 22, 2026, paras. 1, 19–20). A forbearance agreement dated April 29, 2022 was followed by seven extensions, the last of which expired on February 15, 2026, and BMO issued demands on February 8, 2023 and November 24, 2025 (First Report, para. 18). In March 2023 Starline applied for relief under the Farm Debt Mediation Act, and that April it took part in a mediation with the bank, the affidavit says (BMO affidavit #1, para. 32).

The bank put Starline's indebtedness at $8,841,151.59 as at April 16, 2026, under facilities that included three demand loans, an operating loan, a MasterCard and two letters of credit issued in favour of the City of Abbotsford. Its security includes mortgages on the land, a general security agreement, a general assignment of book debts, and personal guarantees from the three shareholders limited to $6.0 million, $3.75 million and $2.5 million (BMO affidavit #1, paras. 10–12). The receiver's figure is approximately $6.6 million as at October 6, 2026, with interest and costs accruing. The receiver's counsel has not yet undertaken an independent review of the bank's security, and the receiver says it will report on that before seeking any distribution to BMO (First Report, paras. 2, 16, 53).

In June 2024, the affidavit continues, Starline and its guarantors told BMO they had arranged refinancing with the Business Development Bank of Canada sufficient to repay what was then owing, and the bank, at their request, extended forbearance a sixth time, to July 31, 2024. "No such refinancing with BDC or another lender has materialized," the affidavit says. BMO adds that Starline missed its annual payment on Demand Loan 771, due March 1, 2025, and that the bank's confidence was undermined by, among other things, the shareholder dispute and related party transactions disclosed in Starline's May 2025 and January 2026 financial statements, "which have prevented the Bank from making a reliable determination of Starline's financial position" (BMO affidavit #1, paras. 35–36, 38, 44). No response from Starline to the bank's evidence is in the record.

On or about the day the order took effect, the principal who managed day-to-day operations gave the receiver a BDC term sheet, dated September 21, 2026, for a $6.4 million real estate refinancing loan, to be secured by, among other things, a first re-advanceable mortgage on the land, a guarantee from Starline and joint and several personal guarantees from certain of the Principals limited to 50% of the outstanding loan amount. The term sheet, the receiver reports, "expressly stated that it was for discussion purposes only and was not a loan offer," and any advance was subject to, among other things, BDC's due diligence and a $32,000 loan processing fee. It expired on October 1, and the receiver "is not aware of any binding commitment having been issued by BDC." The Principals have since engaged with other financial institutions, the receiver understands; as at the date of the report it knew of no refinancing that had been formalized, and no financing commitment had been provided to it (First Report, paras. 23–24).

The freezers stay on

The receiver decided not to continue processing at this time, and the plant's processing operations, it says, "will remain closed for the time being." Among its reasons, it lists incomplete financial information and operational records; an office manager, responsible for inventory and shipping, who was out of the country and not expected back until sometime in November; the cost of closely monitoring operations without adequate processes and personnel; and its review of certain dealings between Starline and Vision Agro Products Ltd., a company it understands to be related to the principal who managed day-to-day operations (First Report, paras. 30–31). It ended the employment of approximately seven hourly employees, whom it estimates are owed about $25,000 in unpaid wages (paras. 28(j), 51).

The refrigeration plant still runs, at a cost of approximately $5,000 to $8,000 a month, to preserve the berries in cold storage: approximately 878,000 pounds after shipments to one customer, with a book value at cost of approximately $457,860 (paras. 31, 42, 74). The customer was All Gold Imports Inc., which had a September 1, 2026 agreement with Starline for the supply of ten truckloads of IQF blueberries. "To preserve value and maintain the customer relationship," the receiver filled two outstanding purchase orders from available inventory at the pre-receivership price of US$1.70 a pound. Under an October 7 agreement, All Gold paid $445,536 on October 13, of which $334,152 was pre-receivership receivables, and $111,495 on October 22 for the final load (para. 41). As at October 29 the receiver held $944,642 in trust, and it has not borrowed under the $500,000 the order allows (paras. 27, 89).