Synaptive: 48 applications on hold, and a second group denied

"Your application for a WEPP payment has been denied for the following reason(s)," begins a Service Canada letter dated August 31, 2026, addressed to a Synaptive Medical Inc. employee whose job ended in the company's receivership. The letter gives one reason: "Synaptive Medical Inc. was subject to a Reverse Vesting Order on July 10, 2026. As a result, your former employer is no longer the subject of Receivership proceedings, and eligible wages are no longer owed to you by Synaptive Medical Inc. as they were transferred to another company," per the Affidavit of Abir Shamim, Sept. 21, 2026, para. 8, Ex. "A".

It reached the Court of Appeal for Ontario on September 21 as the exhibit to an affidavit sworn by Abir Shamim, an associate at Koskie Minsky LLP, which acts for the 48 employees Synaptive terminated during its 2025 CCAA proceeding, per the Affidavit of Abir Shamim, Sept. 21, 2026, paras. 1, 8. They are the employees whose contracts and wage claims the June 2025 reverse vesting order moved into 1001270243 Ontario Inc., known as ResidualCo, and on July 7 Justice Dietrich declared ResidualCo their former employer under the Wage Earner Protection Program Act (WEPPA), a decision reported here on July 12, per the Order (Wage Earner Protection Program Relief), July 7, 2026, paras. 1–2. The Attorney General of Canada is now seeking leave to appeal that order, and the employees' responding factum draws the connection to the letter itself: "The second group has been denied, and the declaration that would answer their denial is the one now under attack," per the Responding Factum, Sept. 21, 2026, para. 67.

What the Attorney General is asking

The Attorney General opposed the declaration below on behalf of Employment and Social Development Canada (ESDC), per the Reasons of Dietrich J., July 7, 2026, para. 5. Its notice of motion (Court of Appeal file COA-26-OM-0340), dated July 28, 2026, relies on ss. 13 and 14 of the CCAA and asks that a panel decide the motion in writing, on a date to be fixed by the Registrar. It describes the 2025 transaction in its own terms: the employment liabilities "were transferred to a shell company –1001270243 Ontario Inc. (ResidualCo) – at the close of the Transaction, with the intention of assigning ResidualCo into bankruptcy shortly thereafter," which happened on September 3, 2025, per the Notice of Motion for Leave to Appeal, July 28, 2026, p. 1, paras. 4–5, 11.

The first ground is jurisdiction: WEPPA, the notice says, "grants exclusive authority to the Minister to make assessments under s. 5(1)," and gives the Canada Industrial Relations Board, and ultimately the Federal Court of Appeal, exclusive jurisdiction to review them; in a CCAA proceeding the Superior Court is left with the limited task in s. 3.2 of the Regulations of deciding whether all of the former employer's employees in Canada have been terminated. By declaring more, the court "interfered with the jurisdiction assigned to the Minister and/or the CIRB and/or the Federal Courts," per the Notice of Motion for Leave to Appeal, July 28, 2026, paras. 14–16. The second ground is the meaning of "former employer," which in the Attorney General's reading of the statute refers to "an entity that, in actual fact, is the true entity that ran a business and would have engaged with employees in relation to its business." The notice faults the court for "relying upon innovations in its Decision" and for holding that a transaction "which occurred subsequent to the termination of the employees" could make ResidualCo their former employer, per the Notice of Motion for Leave to Appeal, July 28, 2026, para. 19(b), (e), (g).

On the leave factors, the notice argues that "[i]n recent years, there has been a significant increase in the use of RVOs for the purpose of restructuring insolvent entities," which makes "the appropriate allocation of limited public funds" a matter of interest to the practice and to the public. Within this proceeding, the appeal "will inform whether the Terminated Employees may receive up to approximately $375,000 in WEPP payments." Nothing else remains to be litigated in the CCAA proceeding, and the Attorney General calls that "an ideal case to resolve the issues raised on appeal," per the Notice of Motion for Leave to Appeal, July 28, 2026, paras. 22–23, 25.

The employees' factum summarizes the Attorney General's own factum, dated August 27, 2026. On jurisdiction, that factum adds the Federal Courts Act, which it reads as giving the Federal Court exclusive original jurisdiction to grant declaratory relief against a federal board, the Minister acting under WEPPA included; on that reading, in the employees' summary, "the Declaration is an advance judicial review of a decision the Minister has not yet made," per the Responding Factum, Sept. 21, 2026, para. 37. On the merits, the Attorney General draws "employer" from the common law tests for an employment relationship, whose factors the summary lists as "control, the provision of tools, financial risk, and exclusivity of service — none of which ever existed between ResidualCo and the Terminated Employees." Because the employees were terminated before the vesting, the argument continues, "by closing there was no employment contract left to move," per the Responding Factum, Sept. 21, 2026, para. 54.

"That concession is dispositive"

Koskie Minsky's answer turns on one sentence of the Attorney General's factum. As the employees quote it, the Attorney General wrote that "[a]lthough the Superior Court must identify the 'former employer' to conduct its s. 5(5) gatekeeping function, neither the WEPPA nor the WEPPR grant it jurisdiction to decide if an entity is a bankrupt 'former employer' under s. 5(1)(b)(i)." "That concession is dispositive," the employees reply, and where two companies are candidates and the claims sit in one of them, "identifying the former employer is the determination," per the Responding Factum, Sept. 21, 2026, para. 38. Section 5(1)(b)(iv), they argue, is a single condition whose two limbs, a CCAA or BIA proposal proceeding and a court's determination under s. 5(5), are joined by "and"; on that reading, "[t]he AG's argument splits one condition between two decision-makers and gives the judge the half that depends on the other," per the Responding Factum, Sept. 21, 2026, para. 39.

The Federal Courts Act, they say, does not reach the order "because the Declaration does not run against the Minister. It declares the status of a company in an insolvency proceeding the CCAA Judge was supervising," per the Responding Factum, Sept. 21, 2026, para. 43. Justice Dietrich's reasons had said the Minister "still must consider individual claims and determine whether such individual claims meet all the criteria required for payment and how much is to be paid," per the Reasons of Dietrich J., July 7, 2026, para. 60. For the declaration under s. 5(1)(b)(i), they rely on s. 97 of the Courts of Justice Act and on Brewers Retail Inc. v. Campbell, 2023 ONCA 534: ousting the Superior Court's jurisdiction takes "clear and unequivocal statutory wording," which WEPPA lacks, per the Responding Factum, Sept. 21, 2026, para. 42.

The control factors, in the employees' view, come from 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59, and Braiden v. La-Z-Boy Canada Limited, 2008 ONCA 464, cases that sort employees from independent contractors. "No one disputes that ResidualCo directed no work," the factum grants. The question under O'Reilly v. ClearMRI Solutions Ltd., 2021 ONCA 385, is contractual formation, and "[t]he AG's test built on control over ongoing actual work cannot decide who owes wages for work that has already stopped," per the Responding Factum, Sept. 21, 2026, paras. 55–56. The factum adds that the Attorney General was served with the June 18, 2025 reverse vesting order, appeared, and neither contested nor appealed it, so that the transfer of the contracts under s. 11.3 of the CCAA is "an unassailable fait accompli" and the proposed appeal a "collateral attack on the operational effects of the RVO," per the Responding Factum, Sept. 21, 2026, para. 57.