Trinity Automotive: $16.9 million of cars, and who knew when

Boban Murikkal James started with a service centre in Brampton in 2013 and bought something almost every year after that: a collision shop in 2016, a used-vehicle superstore in 2020, Oakville Mitsubishi in 2021, Stratford Kia and Stratford Nissan in 2022, a commercial plaza in 2023, Mississauga Chrysler in 2024, and the real estate under it in 2025. By this summer the group was fifteen companies, four franchised dealerships, two used-car superstores, a collision centre, a towing business, a rental fleet and two pieces of development land, employing about 144 people, per the Pre-Filing Report of the Proposed Monitor, Aug. 6, 2026, paras. 20–27 and the Affidavit of Daniel To, Aug. 5, 2026, paras. 18–19, 51.

On August 7, 2026 Justice Black granted an initial order under the CCAA on the application of Bank of Montreal, which is owed $85,231,866.83, per the Affidavit of Daniel To, Aug. 5, 2026, paras. 8, 60 and the Initial Order, Aug. 7, 2026. The applicant is the lender; the debtors are the respondents. Everything that has happened since follows from that.

Sold in violation

A floorplan lender finances new and used inventory car by car and is repaid when each car is sold. A vehicle sold and delivered without the corresponding advance being repaid is, in the trade's language, sold in violation.

BMO's affidavit sets out how the number was found and how it moved. Steinberg Advisory Corp., retained by the debtors in May 2026, identified 46 such vehicles at Mississauga Chrysler on June 17, about $3.17 million, plus one stolen vehicle. A full physical count on July 2 and 3, run by Goldhar & Associates Ltd. — retained by BMO on June 22 as its own financial advisor — found 264 vehicles across the dealerships representing about $13.04 million of unrepaid advances, against 135 self-funded vehicles worth about $2.88 million, for a net exposure of roughly $10.2 million, per the Affidavit of Daniel To, Aug. 5, 2026, paras. 9, 75, 81. BMO says it "lost confidence that management can stabilize the Businesses and implement the necessary restructuring without Court supervision and meaningful controls," per the Affidavit of Daniel To, Aug. 5, 2026, para. 11.

By September 7 the monitor's counsel put the figure higher again, in a letter that also puts the accusation in the plainest terms it has yet taken: the objections being raised come "in circumstances where the former principal of the business cannot account for what now appear to be up to $16.9 million of proceeds of sale of vehicles sold in violation of agreements with the Respondents' senior secured lender," per the Second Supplement to the Monitor's Second Report, Sept. 7, 2026, Appendix "A".

The respondents do not, on this record, dispute that vehicles were sold in violation. They dispute that it was news. Their counsel's letter of September 6 sets out a dated list of BMO's own dealership audit findings, beginning with July 30, 2020, when the bank's audit team "identifies $174,071.40 worth of vehicles sold-in-violation at the Oakville Used Car Superstore and requests payment," and running through September 3, 2025, when it "identifies $3,598,401.55 worth of vehicles sold-in-violation at Mississauga Chrysler and $1,051,957.47 at Stratford Nissan," to November 18, 2025. Their conclusion: "The existence of SIVs was part of the ordinary course of conduct in the lending relationship between BMO and the Respondents for six years" — during which, they say, the bank extended and increased credit, including the 2023 mortgage, the 2024 acquisition financing and the amended credit agreement of August 29, 2025, per the Motion Record of the Respondents, Sept. 7, 2026, Exhibit "A" (letter of Sept. 6, 2026), pp. 4–5.

The monitor's answer is careful, and it concedes the ground it does not need: "regardless of when the parties were aware that vehicles were being sold-in-violation, the known scope and quantum of the issue has continued to grow and is materially worse today than it was at any prior point in time," per the Second Supplement to the Monitor's Second Report, Sept. 7, 2026, Appendix "A".

None of this has been tested. Each account is an allegation in the instrument that makes it.

What the comeback order handed over

The amended and restated initial order of August 17 is where the balance of power in this proceeding was set. Justice Conway extended the stay to October 30, raised the administration charge from $350,000 to $750,000 and the interim financing charge from $500,000 to $3.5 million, and rescheduled the sale-process motion from August 21 to September 8 because, "according to the Monitor's counsel, they will not be ready by then," per the Amended and Restated Initial Order, Aug. 17, 2026 and the Endorsement of Conway J., Aug. 17, 2026, para. 9.

The endorsement also records the respondents' posture that day, through counsel newly on the file: "Ms. Miller is now on for the Debtors. She takes issue with some of the factual characterizations but does not oppose the relief sought," per the Endorsement of Conway J., Aug. 17, 2026, para. 3. That sentence is now doing a great deal of work, because the monitor's position is that the debtors cannot revisit what they did not oppose.

Eight days later the relationship had changed. On August 25 the respondents' counsel wrote about appointment letters issued by the monitor to management, saying some "appear to be terminations of existing management without actually stating so," and closing with a question that is really a warning: "In taking these steps without notice or any discussion with the directors, officers and existing management of the Respondents… the Monitor is exercising powers of a receiver. Perhaps we should discuss if that is the process through which your client would prefer this proceeding continue," per the Motion Record of the Respondents, Sept. 7, 2026, letter of Aug. 25, 2026, pp. 1, 4.

Boban James was terminated on August 25. The second report describes him and his ex-wife as "no longer required," per the Second Report of the Monitor, Sept. 3, 2026, para. 28. The respondents point out that he was the founder and directing mind and the sole person designated a "person in charge" for the four dealerships under Ontario's motor vehicle dealer regime, and say the report offers no explanation beyond calling him unnecessary, per the Motion Record of the Respondents, Sept. 7, 2026, Exhibit "A" (letter of Sept. 6, 2026), p. 6. The monitor's counsel replies that the regulator and the manufacturers were notified and that no further compliance steps are required.

What is being asked for on September 8

The monitor's motion, served late on Thursday September 3 for a hearing the Tuesday after the long weekend, seeks approval of a two-phase sale and investment solicitation process — expressions of interest by October 9, binding bids by November 6, a sale approval hearing in the week of November 27, an outside closing of January 29, 2027 — the appointment of BDO Canada Transaction Advisory Services Inc. as sales agent at $25,000 a month plus a success fee, and a $600,000 sales agent charge. It also seeks a $250,000 key employee retention plan and charge, authority to pay up to $1 million of pre-filing critical vendor claims, authority to wind down the Mississauga used-car superstore without further order, and a sealing order over the sales agent comparison and the retention plan detail, per the Motion Record of the Monitor, Sept. 3, 2026, Notice of Motion and the Factum of the Monitor, Sept. 4, 2026.

The respondents object to the timing — "extraordinarily short service (1 business day)… for the substantive relief that is being sought on the Tuesday following a long weekend" — and to the sales agent. Their point on BDO is one of process rather than competence: the Goldhar partner leading the file "was a partner at BDO just two months ago," and they say the second report gives no analysis of why BDO was preferred over the other candidates. "That doesn't sound like it satisfies Soundair principles as to the integrity of the process," their counsel wrote, per the Motion Record of the Respondents, Sept. 7, 2026, Exhibit "A" (letter of Sept. 6, 2026), pp. 1–3, and Exhibit "H" (email of Sept. 3, 2026). The second report does disclose the connection, in one sentence: "The Monitor wishes to note that a Senior Managing Director at Goldhar was formerly employed by BDO," per the Second Report of the Monitor, Sept. 3, 2026, para. 69.

There is also a directors' charge that nobody has resized. It was set at $250,000 and the proposed monitor's own pre-filing report explains why: the directors have no insurance policy, and the amount "is intended to reflect one month of net Harmonized Sales Tax ("HST") exposure based on historical experience," per the Pre-Filing Report of the Proposed Monitor, Aug. 6, 2026, paras. 82–83. The respondents have asked since August 17 for it to be resized to actual post-filing exposure and say they have been told only that the monitor "is looking into" it. The monitor's answer is that vacation-pay records are inconsistent and unreliable and that resizing awaits a reconciliation.

The collateral attack point

The monitor's reply of September 7 does not engage most of these objections on their merits. It reframes them. The respondents' inquiries, it says, "have a common theme. They are premised on the assumption that the Monitor's powers under the Initial Order and the ARIO, neither of which your clients opposed, can be countermanded by the Respondents. This is incorrect and is a collateral attack on these Orders of the Court" — and it reproduces the paragraphs of the amended order conferring exclusive powers on the monitor, per the Second Supplement to the Monitor's Second Report, Sept. 7, 2026, Appendix "A". It rejects the suggestion that the respondents' questions went unanswered as "simply factually incorrect," offers the sales agent comparison table on an undertaking of confidentiality while refusing the retention plan detail on employee-privacy grounds, and records that it is "instructed to oppose" the respondents' informal request to Justice Dunphy for a short adjournment, "as delay in the circumstances only exacerbates the losses being incurred."

On the bank accounts the two accounts of the same facts only partly overlap. The monitor says seven TD accounts have now been identified, three tied to the ancillary operations, one to a related party of which Mr. James is a director, three originally unknown — and that since September 4, when TD granted direct access, two previously undisclosed VISA accounts have surfaced. The respondents say BMO knew about the ancillary-operations relationship before the filing, and point to BMO's own affidavit, which does disclose "certain accounts for the Ancillary Operations at TD."

Where all of this leaves the estate is in the supplement filed September 4: a revised thirteen-week forecast to November 20 showing a further net outflow of about $6.17 million, and the monitor's statement that it intends to return on October 1 to ask that the interim facility be raised from $3.5 million to $5 million, per the Supplement to the Monitor's Second Report, Sept. 4, 2026, para. 16.

The motion was returnable at 11:00 a.m. on September 8 before Justice Dunphy, by videoconference. No order from that hearing is in the record read for this piece.