Waterloo Innovation Network: a motion against the lender's charges

On October 19, the former chief operating officer of the two Waterloo Innovation Network companies moved to take the lender's security off 176 Columbia Street West, the building Waterloo Innovation Network 2 Inc. (WIN2) owns. Together with Waterloo Innovation Network PM Inc. (WIN PM), which managed the debtors' properties from 2014 to 2022 and of which the former COO is sole director and sole shareholder, the former COO asks the court, among other things, to discharge the $8,000,000 charge registered against the building on September 7, 2018 and the $15,000,000 charge registered on June 26, 2023, both in favour of Waygar Capital Inc. as agent for the lender, Ninepoint Canadian Senior Debt Master Fund LP; to delete three notices registered to amend the first charge; to declare five amending agreements, dated from August 1, 2019 to March 31, 2023, "invalid and void as against the creditors of Waterloo Innovation Network 2 Inc."; and to stay the receivership, including the receiver's motion for approval of its subscription agreement with Hyperion Compute Corp. and a reverse vesting order, per the Notice of Motion, Oct. 19, 2026, relief paras. 1–5 and the former COO's affidavit, Oct. 19, 2026, paras. 1, 13.

The motion is returnable at 10:00 a.m. on October 30, the day Justice Cavanagh set for the receiver's motion, per the Notice of Motion, Oct. 19, 2026, p. 1 and the Fifth Report of the Receiver, Oct. 7, 2026, para. 23. When the receiver's motion was reported here on October 8, the grounds of the opposition were not yet in the record. The lender has since answered in affidavits of October 26 and 27 from one of its managers, a vice-president at Waygar while the loans were made; The Fuller Landau Group Inc., as receiver, in a Supplement to its Fifth Report dated October 27; and on October 28 the former COO replied to the lender, per the lender's affidavit, Oct. 26, 2026, paras. 1–3, the lender's supplementary affidavit, Oct. 27, 2026, paras. 1–2, the Supplement to the Fifth Report, Oct. 27, 2026, para. 3 and the former COO's second supplementary affidavit, Oct. 28, 2026, para. 2.

Why the challenge comes now

The former COO's notice of motion says that the court and the receiver had accepted that the challenge to the lender's security "would be determined as a distribution issue when the Property was monetized," and that the reverse vesting transaction "does not sell or monetize the Property." Under it, the notice says, "Only $500,000 in new money would be paid" and the lender would receive a 33.33% interest in the purchaser; the transaction, it says, "is a further preference in favour of Ninepoint," per the Notice of Motion, grounds paras. 11, 13–14. The receiver's aide memoire for the October 2 scheduling conference had told the court that, other than payment of priority payables, the price "does not include substantial cash consideration," and that the cash "will not be sufficient to satisfy" the movants' claim "if it is determined to be in priority to a portion of the Lender's security," per the Receiver's Aide Memoire, Sept. 30, 2026, paras. 9–10 (Ex. "F" to the former COO's affidavit).

WIN PM sued WIN2 in July 2022 for $1,186,500, including HST, over leasehold improvements for WIN2's tenant Ford; with interest at 11% the former COO puts that claim at about $2,100,500. The former COO's own claim, about $2,865,792 with interest, arises under a December 2016 participation agreement with Wekerloo Developments Inc. and WIN2's indirect shareholder, per the former COO's affidavit, Oct. 19, 2026, paras. 16–17, 19 and the Guarantee Agreement, June 23, 2023, recital B (Ex. "EE"). WIN2's statement of defence of August 26, 2022 denies the WIN PM claim, per the former COO's second supplementary affidavit, Oct. 28, 2026, para. 11 and Ex. "H". The receiver notes that WIN2 is not a party to the participation agreement and says the claims, "If proven," are "at best, unsecured," per the Supplement to the Fifth Report, paras. 13–14.

Three notices and a guarantee

The loan began with a credit agreement of September 7, 2018 under which, the notice of motion says, Waygar lent up to $8,000,000 to WIN2 and Waterloo Innovation Network Inc. (WIN), jointly and severally, secured by the charge on 176 Columbia Street West and a charge on WIN's property at 156 Columbia Street West. "When the loan was made, Waygar knew that WIN 2 was insolvent and was in default of its tax and trade obligations," the notice says; of the $8,000,000, it says, Waygar retained $1,153,799, including twelve months' interest of $1,000,000, per the Notice of Motion, grounds paras. 3–5.

Notices of agreements amending the 2018 charge were then registered against the property on August 1, 2019, March 20, 2020 and April 13, 2021, increasing its principal amount, as the receiver's counsel's security opinion describes them, to $11,200,000, $13,000,000 and $30,000,000, per the Security opinion of Dickinson Wright LLP, Apr. 8, 2025, p. 2, item 4 (App. "B" to the Supplement). Each is made under s. 71 of the Land Titles Act and records a consideration of $2.00, per the Instruments WR1201598, WR1249625 and WR1331454 (Exs. "U", "W" and "X" to the former COO's affidavit). The notice argues that "A notice under section 71 protects an existing unregistered interest in land; it does not create a charge or increase the principal amount of a registered charge." The amending agreements, the notice says, "are preferences and fraudulent transactions intended to defeat other creditors of WIN 2," the movants among them; most of the advances under them "were not advanced to or for the benefit of WIN 2"; and the lender's claims under them were statute-barred by the time the receiver was appointed on February 14, 2025, per the Notice of Motion, grounds paras. 6–8, 16.

The original loan, on the movants' account, has been repaid. The notice says the $8,000,000 "was paid in full" and that Waygar discharged its security on 156 Columbia Street West, "which secured the same joint debt," in 2021; the former COO's affidavit says Waygar received "at least" $8,386,149 on account of the loan, counting amounts retained from advances and $5,000,000 paid from a property sale in November 2021, per the Notice of Motion, grounds para. 15; former COO's affidavit, para. 29.

The second charge secures a guarantee dated June 23, 2023, by which WIN2 guaranteed up to $15,000,000 of the El Mocambo companies' debt to the lender; WIN2 granted the charge three days later. "No new funds were advanced to WIN 2," the notice says; WIN2 "was insolvent when it granted the guarantee," and the guarantee and charge "were given for no consideration, with the intent to defeat, hinder, delay or prejudice WIN 2's other creditors," and are void as against those creditors, it says, under the Fraudulent Conveyances Act and the Assignments and Preferences Act, per the Notice of Motion, grounds paras. 9–10.

What the lender filed

The lender's manager answers with a chart. For each advance it sets out the agreement, the direction the debtors gave and the wire confirmation, and identifies where the former COO was the visible signatory: as the debtors' authorized signing officer, the former COO signed the directions for the $8,000,000 advance of September 2018, the $1,800,000 advance of March 2020 and the $17,000,000 advance of April 2021, and signed the loan agreement and the first, third and fourth amending agreements. Money sent to the debtors' lawyers, McCarter Grespan, under the debtors' directions was, the manager says, "effectively advanced to the Debtors," per the lender's affidavit, Oct. 26, 2026, paras. 18–20. Each time the security was supplemented, the manager says, it "corresponded with an increase in the Lender's credit exposure and/or an amendment to a term of the lending arrangements that benefitted the Debtors or the Elmo Debtors," per the lender's affidavit, para. 9.