Warehouse One: every secured lender was an affiliate

Warehouse One opened in Winnipeg in 1977, and its customers knew it as "The Jean Store," according to the Affidavit of Shamsh Kassam, May 1, 2026, para. 9. WHO Industries Inc. bought the business out of receivership in 2002, and the company's director deposes that it made money from then until the COVID-19 pandemic, when its financial performance "began to deteriorate." In April 2025 the company bought the Bootlegger brand, founded in 1971, out of the CCAA restructuring of Bootlegger Clothing Inc., a business once run as a subsidiary of Comark Holdings Inc., which the affidavit describes as "previously owned by an affiliate of the Applicant's majority shareholder," per the Affidavit of Shamsh Kassam, May 1, 2026, paras. 10–12.

By the spring of 2026 the company ran 128 stores across eight provinces and one territory (95 under the Warehouse One banner, 25 Bootlegger, 8 carrying both) and employed 982 non-unionized people, directed from a head office and distribution centre at 1530 Gamble Place in Winnipeg that it leased from Parian Logistics Inc., an affiliate of its majority shareholder, per the Pre-Filing Report of the Proposed Monitor, May 4, 2026, paras. 5.2–5.7. The company attributes its decline to low-cost, "fast-fashion" and online competitors, to losses after the Bootlegger purchase, and to its small-town stores, about one-third of its retail footprint and 40% of its sales, where sales had fallen more than 10% year over year, "driven by an aging and shrinking customer base and increased e-commerce penetration." It lost approximately $15.0 million in the fiscal year ended February 28, 2026, after $6.5 million the year before, per the Affidavit of Shamsh Kassam, May 1, 2026, paras. 14–15.

On May 6, 2026, Madam Justice Grammond of the Court of King's Bench of Manitoba granted the company protection under the CCAA and appointed Alvarez & Marsal Canada Inc. as monitor. It filed, by its own account, to close its stores in an orderly liquidation and to use the stay to find value in a building, its intellectual property and its corporate attributes, per the Affidavit of Shamsh Kassam, May 1, 2026, para. 20 and the Pre-Filing Report of the Proposed Monitor, May 4, 2026, para. 1.10. By September the stores were shut and the brands sold, and the company had become 3883507 Canada Ltd. On September 9 Justice Grammond authorized the distributions that send what remains to the two lenders now at the top of its secured debt.

A bank taken out eight days before filing

On April 28, 2026, Highgate Capital Ltd., "an entity affiliated with the Applicant through common ownership," bought CIBC's rights under the company's senior credit facility. The purchase "was completed at 100-cent dollars and provided a full recovery for CIBC," per the Pre-Filing Report of the Proposed Monitor, May 4, 2026, para. 1.7. About $7,127,000 was then owing under the revolving facility to Highgate as senior lender, per the Pre-Filing Report of the Proposed Monitor, May 4, 2026, para. 6.7.

Behind that facility sat approximately $33,057,000 in what the record calls the Affiliate Secured Loans. Two were interest-free grid promissory notes dated October 15, 2020, from the company's shareholders: $8,250,000 from WHO Industries, which owns 75%, and $2,750,000 from 4565038 Manitoba Ltd., which owns 25%. The other two, under loan agreements dated May 20, 2025, were $14,012,862 from Highgate and $6,443,871 from R.I.S. Media Ltd., each at 10%, with interest capitalized rather than paid for the last four fiscal quarters, $1,600,083 of it by April 28, per the Pre-Filing Report of the Proposed Monitor, May 4, 2026, paras. 1.4, 6.9–6.11. The affidavit identifies R.I.S. Media as "an affiliate and indirect shareholder" of the company and Highgate as "an affiliate," per the Affidavit of Shamsh Kassam, May 1, 2026, paras. 24–26. The proposed monitor, while expressly giving no legal opinion on the intercreditor agreements, understood them to rank the senior facility first, the Highgate and R.I.S. Media loans next and pari passu, and the two shareholder notes last, per the Pre-Filing Report of the Proposed Monitor, May 4, 2026, para. 6.15. "The Senior Lender and the Affiliate Lenders are direct or indirect shareholders or affiliates of the Applicant," the monitor summarized in July, per the Second Report of the Monitor, July 20, 2026, para. 6.1.

Highgate also supplied the interim financing, a revolving facility of up to $3.0 million at 10%. The proposed monitor called Highgate "a natural and appropriate interim lender" given its existing position, said the company had no other immediate alternative, and set the rate against comparable facilities ranging from 4.2% to 18%, noting "no fees or other economics for the DIP Lender," per the Pre-Filing Report of the Proposed Monitor, May 4, 2026, paras. 9.3, 9.6. Through July 10 the company had not needed to draw on it, per the Second Report of the Monitor, July 20, 2026, para. 7.3.

Local counsel in Manitoba and British Columbia gave opinions that the security was valid and perfected under those provinces' law; for the seven other jurisdictions the monitor, citing cost, reported the lenders' registrations instead of opinions, per the First Report of the Monitor, May 12, 2026, paras. 8.3–8.4. Unsecured creditors were owed about $7.0 million, and gift card obligations came to about $900,000 more, per the Pre-Filing Report of the Proposed Monitor, May 4, 2026, paras. 5.11–5.12. In May the monitor told the court it was "not anticipated that there will be sufficient realizations that will result in a distribution to unsecured creditors," and that "the secured creditors are the fulcrum creditors in this case," per the First Report of the Monitor, May 12, 2026, para. 6.19.

A liquidation ahead of its forecast

Gordon Brothers Canada ULC ran the sale as consultant for 2% of gross merchandise proceeds and 20% of proceeds from furniture, fixtures and equipment. The company chose it partly for its "prior working relationship and familiarity with the Applicant and other retailers affiliated with the Shareholders," per the First Report of the Monitor, May 12, 2026, paras. 5.2, 5.4. Four stores closed shortly after filing, and the sale opened in the other 124 on May 15 with approximately $13.1 million of inventory at landed cost, per the Second Report of the Monitor, July 20, 2026, paras. 4.1–4.4.

By July 10 receipts had reached $25,210,000 against a forecast of $16,421,000. The monitor credited "materially greater-than-forecast gross margin and sales volumes" and better FF&E proceeds, and the company held approximately $14.0 million in cash where the forecast had projected $6,750,000, per the Second Report of the Monitor, July 20, 2026, paras. 7.1–7.3. The last stores closed on July 26. In all, the sale produced net proceeds of approximately $20.5 million from merchandise and approximately $613,000 from FF&E; store employees were terminated by July 29 and head office staff by August 14, each paid final wages and accrued vacation, per the Third Report of the Monitor, Sept. 1, 2026, paras. 4.1–4.6.

Some were owed termination and severance pay that the company was "unable to satisfy in the circumstances," per the Second Report of the Monitor, July 20, 2026, para. 9.5. On July 27 Justice Grammond declared the former employees to be individuals to whom the Wage Earner Protection Program Act applies. The same order directed the company to pay Highgate, as senior lender by assignment, everything owing under the 2010 CIBC credit agreement, and extended the stay from September 11 to December 18, 2026, per the Distribution, WEPPA Declaration and Stay Extension Order, July 27, 2026, paras. 2–4. The payment, approximately $7,128,000 in full satisfaction, was made on August 4, per the Third Report of the Monitor, Sept. 1, 2026, para. 4.9.

The brands, for $744,000

The brands were marketed without a formal solicitation process, an approach the monitor had supported in May, citing the company's limited liquidity and "the limited pool of potential purchasers" for its ancillary assets, per the First Report of the Monitor, May 12, 2026, para. 6.19. It contacted about 20 parties. Eight signed non-disclosure agreements and entered a data room, and YM Inc. (Sales) made the offer that became the transaction, per the Second Report of the Monitor, July 20, 2026, paras. 5.4–5.5. It bought, on an as-is, where-is basis, the intellectual property of the Warehouse One and Bootlegger brands: trademarks and trade names, logos, website and e-commerce content, product images, domain names, social media accounts and handles, and customer and marketing lists, less the personal information of customers who had not consented. It took on only liabilities arising from its own ownership after closing. The monitor described the deal as "the sole viable transaction in respect of the Purchased Assets to have materialized to date" and said further marketing was unlikely to do better, per the Second Report of the Monitor, July 20, 2026, paras. 5.7, 5.10.

The price sat in a confidential appendix that the approval and vesting order of July 27 sealed until the monitor filed its certificate of completion, per the Approval and Vesting Order, July 27, 2026, paras. 3–4, 11. The deal closed on July 30. With the seal lifted, the Third Report puts the purchase price at $744,000, a receipt the cash-flow forecast had not counted, per the Third Report of the Monitor, Sept. 1, 2026, paras. 4.7, 6.2. The agreement also required the company to take a legal name without "Warehouse One" or "Bootlegger" in it within 30 days of closing, per the Second Report of the Monitor, July 20, 2026, para. 5.9. On August 18 it became 3883507 Canada Ltd., per the Third Report of the Monitor, Sept. 1, 2026, para. 8.1.

One building in Kenora

Of the 128 stores, one stood in a building the company owned: a Warehouse One at 323 First Street South in Kenora, Ontario, per the Pre-Filing Report of the Proposed Monitor, May 4, 2026, para. 5.5. Royal LePage Landry's for Real Estate Kenora listed it on July 14 at $495,000. The listing drew what the monitor calls significant interest from a number of potential purchasers, the broker set an offer deadline of July 29, and four offers came in. The company chose one on the Ontario Real Estate Association's commercial template, for cash on closing, conditional on court approval and to close by September 25, per the Third Report of the Monitor, Sept. 1, 2026, paras. 5.3–5.6.

The agreement of purchase and sale is dated July 31, and the buyers are two individuals who have designated an Ontario corporation, 4 Real Developments Inc., as nominee to take title, per the Notice of Motion of the Applicant, Sept. 2, 2026, para. 1(b) and grounds, para. 14. The price and deposit are in a confidential appendix the company asked to seal until closing, and the monitor says only that "the purchase price under the Kenora Transaction exceeds the listing price," per the Third Report of the Monitor, Sept. 1, 2026, paras. 5.8–5.10. The company's brief told the court the purchaser is not a "related person" under s. 36(5) of the CCAA, so the additional test in s. 36(4) is not engaged, per the Motion Brief of the Applicant, Sept. 3, 2026, Part VI, para. 7.

The only security interest on title is a mortgage to Highgate securing the second-lien loans, per the Third Report of the Monitor, Sept. 1, 2026, para. 5.2. The monitor's parcel register search in May showed that the company acquired the property on October 31, 2013 and that Highgate registered its mortgage on May 6, 2026, per the First Report of the Monitor, May 12, 2026, para. 8.6.

What is left for the second lien

With the senior facility repaid, the Highgate and R.I.S. Media loans became the senior-ranking secured claims, with principal of $20,456,733 at April 28, ahead of the notes held by WHO Industries and 4565038 Manitoba, per the Third Report of the Monitor, Sept. 1, 2026, paras. 7.5–7.6. The Distribution and Ancillary Order authorizes one or more distributions to Highgate and R.I.S. Media, pari passu and pro rata, up to the full obligations under those loans "(including, without limitation, principal, interest and fees and expenses)," per the Distribution and Ancillary Order, Sept. 9, 2026, para. 2.

Working from the company's cash, approximately $4.8 million at August 28, the expected net proceeds from Kenora and the forecast cost of finishing, the monitor estimated that approximately $5.0 million will be available. The second-lien lenders "are expected to suffer a significant deficiency on the amounts owing to them," and in sizing what to hold back the monitor considered the cash needed to wind down, complete the CCAA proceedings "and administer any subsequent bankruptcy filing," per the Third Report of the Monitor, Sept. 1, 2026, paras. 6.4, 7.8–7.10.

The same order approved the monitor's four reports and its conduct, with the protection that "only the Monitor, in its personal capacity and only with respect to its own liability, shall be entitled to rely upon or utilize in any way such approvals." It approved, without a formal passing of accounts, the monitor's fees and disbursements from May 3 to August 15 and those of Goodmans LLP from May 6 to August 30, and it amended the style of cause to 3883507 Canada Ltd., per the Distribution and Ancillary Order, Sept. 9, 2026, paras. 3–5. A&M's accounts came to $576,056.84 for 816.1 hours, led by Josh Nevsky, senior vice-president, at $1,150 an hour and Zach Gold, director, who billed 426.2 hours at $680. Goodmans billed $169,723.50 for 150.5 hours, 113.1 of them by Bradley Wiffen at $1,100, per the Third Report of the Monitor, Sept. 1, 2026, paras. 9.4–9.6, Apps. F–G. The monitor tied the bill to the shortfall: the second-lien lenders "bear the economic burden of the fees and expenses of the Monitor and its counsel," and they support the approval, per the Third Report of the Monitor, Sept. 1, 2026, para. 9.11.

At the September 9 attendance the court heard counsel for the company, the monitor, and Highgate, WHO Industries and R.I.S. Media, with no one appearing for anyone else on the service list; Justice Grammond signed the order on September 11, per the Distribution and Ancillary Order, Sept. 9, 2026, pp. 2–4. Once Kenora closes, the monitor says, the company "will have no remaining real or personal property with any material value," though with the monitor's help it continues to review whether its corporate attributes can yield any value, per the Third Report of the Monitor, Sept. 1, 2026, para. 7.9. The next steps the monitor anticipates are the distributions, final financial statements and tax filings, help for former employees with their WEPPA submissions to Service Canada, and a return to court before the stay runs out on December 18, 2026, per the Third Report of the Monitor, Sept. 1, 2026, para. 11.1.