Synaptive: the receiver asks to pay the employees directly

"We strongly object to the legal position articulated in the denial letters," Stephen Brown-Okruhlik of McMillan LLP, counsel to Richter Inc. as receiver of Synaptive Medical Inc., wrote on September 14, 2026 to counsel for Employment and Social Development Canada (ESDC). Richter had applied under the Wage Earner Protection Program Act (WEPPA) for the 72 employees it terminated when the receivership began, and the applications, McMillan wrote, were being denied. The employees met the statute's criteria "at the time of their termination, when their entitlements arose, and at the time that their payment applications were submitted," the letter says, and the July 10 reverse vesting order "did not purport to compromise the WEPP entitlements of affected employees or relieve your client of its payment responsibilities under the program," per the Third Report of the Receiver, Oct. 15, 2026, App. "E" (McMillan LLP letter, Sept. 14, 2026), pp. 1–3.

The reply, dated September 25, came from Faiza Ahmed-Hassan of ESDC's legal services at the Department of Justice. The Minister of Labour decides eligibility, the letter says; an applicant may ask for a review under s. 11 of WEPPA, with any further recourse under ss. 14 to 20; and "to the extent that your correspondence is intended to challenge individual eligibility determinations, those determinations must be addressed through the statutory review and appeal processes." It closes: "Nothing in this letter should be understood as expressing a view on the merits of any individual application or on the outcome of any review or appeal," per the Third Report of the Receiver, Oct. 15, 2026, App. "F" (ESDC letter, Sept. 25, 2026), pp. 1–2.

Richter attached both letters to its Third Report, dated October 15, and asks the court to let it pay the 72 employees their priority under s. 81.4 of the Bankruptcy and Insolvency Act, which it estimates at approximately $116,409, straight to them. That is not the usual course, the report explains. Such distributions "are typically withheld pending confirmation by ESDC of payments made under the WEPPA," after which ESDC "would ordinarily provide notice of its subrogated claim" and the money would go to ESDC rather than the employees. "In light of ESDC's denial of the WEPPA claims and the anticipated delay in the resolution of the employees' appeals," Richter seeks approval to pay the employees directly, "as there is currently no certainty as to when, or if, ESDC will assert a subrogated claim in respect of such amounts," per the Third Report of the Receiver, Oct. 15, 2026, pp. 26–27, paras. 76–78. The motion is returnable before Justice Jane Dietrich by videoconference at 10:30 a.m. on October 26, and also asks for the receivership's final distributions, an amendment to the July 10 distribution order, a declaration about a lawsuit by Pacer Air Freight Ltd., and Richter's discharge, per the Notice of Motion (Distribution and Discharge Order), Oct. 15, 2026, Motion Record pp. 25–26, paras. 1–2.

Held in abeyance

The denials were reported here on September 22. The September 14 letter sets out what came before them. Richter submitted the 72 applications in June. In July it learned they were not being processed, and Service Canada told it the hold was "a precautionary measure to avoid unintended payments to employees who were terminated in a previous proceeding," the 2025 CCAA, "while the appeal period for a decision in that proceeding remained outstanding." On August 6, Walter Kravchuk of the Attorney General's office advised that the applications were "currently being held in abeyance pending confirmation of the status and legal effect of the RVO transaction." On August 13, ESDC's counsel advised that Service Canada would remove the hold and proceed with the eligibility assessment. The denials followed, per the Third Report of the Receiver, Oct. 15, 2026, App. "E" (McMillan LLP letter, Sept. 14, 2026), pp. 1–2.

The letter then makes a further point. "We also note that the explanation provided in the letters would appear to indicate that a Federal Government agency delayed the assessment of applications so as to avoid making payments to terminated employees on the basis of a perceived loophole related to the timing of the assessment," it says, and it directs ESDC's counsel to s. 4.2 of the BIA "regarding a stakeholder's good faith obligations," per the Third Report of the Receiver, Oct. 15, 2026, App. "E" (McMillan LLP letter, Sept. 14, 2026), p. 3. The September 25 reply does not mention s. 4.2, and no other answer to the point is in the record read for this piece. In the report's own account, ESDC first put the applications on review hold over concerns that it "may inadvertently pay former terminated employees in respect of Synaptive's prior CCAA Proceedings"; Richter now understands that a number of the employees "have commenced or are considering requests for review of their eligibility determinations," per the Third Report of the Receiver, Oct. 15, 2026, paras. 36–41.

The July 10 distribution order already authorizes and directs Richter to pay, from the net proceeds, "all amounts required to be paid by the Receiver to satisfy claims under section 81.4 of the BIA," per the Order (Distribution and Claims Procedure), July 10, 2026, para. 14(a). The new motion would have them paid "directly to relevant employees without involvement of any Federal Government agency in the payment process," per the Notice of Motion (Distribution and Discharge Order), Oct. 15, 2026, para. 2(d). The Attorney General's motion for leave to appeal the July 7 order declaring the 2025 residual company, 1001270243 Ontario Inc., a former employer under WEPPA, also reported here on September 22, has no decision in the record, per the Notice of Motion for Leave to Appeal, July 28, 2026, para. 1.

What the Globus deal brought in

The Second Report of June 30 set the purchase price for Synaptive's shares out in a confidential appendix, per the Second Report of the Receiver, June 30, 2026, para. 33. The transaction with Globus Medical Inc. closed on August 4, and the Third Report's statement of receipts and disbursements for April 28 to October 9, 2026, in Canadian dollars, now gives the proceeds: $12,600,000 of sale proceeds, which the text calls "proceeds from the Transaction of $12.6 million." Total receipts were $14,561,815. Against them the statement sets $1,524,660 of disbursements, among them $443,007 for the receiver's counsel and $370,934 of receiver's fees, and $1,170,318 of other disbursements, which repaid the receiver's borrowings and paid the stalking horse bidder's $50,000 expense reimbursement. The closing cash balance on October 9 was $11,866,837, per the Third Report of the Receiver, Oct. 15, 2026, paras. 14, 59–62.

Export Development Canada holds a senior secured note for US$6,000,000 of principal, per the First Report of the Receiver, May 7, 2026, para. 18(a). Richter's notice of motion puts EDC's secured claim on it at US$6,474,667 as at June 30, 2026, accruing interest at US$1,333.33 a day, per the Notice of Motion (Distribution and Discharge Order), Oct. 15, 2026, para. 3(p). The July 10 order authorized paying EDC "the Canadian dollar equivalent of US$6,000,000 plus accrued and unpaid interest," per the Order (Distribution and Claims Procedure), July 10, 2026, para. 14(b). That wording, the report says, was "due to an inadvertent error": the amount it authorized "did not include the costs incurred by EDC in connection with its enforcement actions which are properly payable under the terms of the Senior Note," per the Third Report of the Receiver, Oct. 15, 2026, p. 27, para. 74. The two orders now sought would together pay EDC the Canadian dollar equivalent of US$6,000,000, plus enforcement costs of C$182,447.44, plus accrued and unpaid interest, "in full and final satisfaction of the obligations under the Senior Note," per the Third Report of the Receiver, Oct. 15, 2026, para. 13; p. 29, para. 78(c).