Western Potash: the debtors' counsel comes off the charge

Western Potash Corp. could not fund the payroll for the week ending August 28, 2026. It was paid out of the US$1,000,000 that FTI Consulting Canada Inc., as monitor, had drawn on August 25 under the interim financing facility of the company's senior secured lender — the first draw of these proceedings, made to meet what the monitor called a critical and basic operational requirement, per Supplement to the First Report of the Monitor, Aug. 31, 2026, para. 11 and First Report of the Monitor, Aug. 27, 2026, para. 16(e).

By then the monitor had learned where the company's money had lately been going. Since its appointment it had found further enforcement steps against the debtors, including garnishments commenced by Saskatchewan's Ministry of Finance over unremitted sales taxes, and had learned that the company, in response to the threat of garnishment, had begun using a bank account belonging to its ultimate parent, Western Resources Corp. "This is concerning as the parent bank account is outside the reach of creditors of the Company," the monitor wrote, adding its understanding that the practice contravened the April 28, 2022 credit agreement with Appian, per First Report of the Monitor, Aug. 27, 2026, paras. 31–32.

The petition that put Western Potash into the CCAA on August 21 was brought by its lender and was recorded as unopposed, per Notice of Hearing, Aug. 20, 2026, p. 1. Ten days later the debtors were in the other chair. On August 29 they filed an application response opposing both orders the monitor had set down for the comeback hearing, and served the first affidavit of Wenye (Bill) Xue, the company's executive director and chief executive officer, in support of an amended and restated initial order of their own — one that would strip out certain of the monitor's enhanced powers, per Application Response of the Debtors, Aug. 29, 2026, Part 2 and Affidavit #1 of Wenye (Bill) Xue, Aug. 28, 2026, paras. 1, 9.

What management said it still had

The Xue affidavit is the first document in this record in which the companies speak at length, and its subject is the investor pipeline management says it has worked since the project was suspended on May 17, 2024. The parent completed three significant equity financings and two other offerings between 2013 and 2024, all involving Chinese investors, for total proceeds of more than CAD$200,000,000; China, Mr. Xue deposes, has been the world's largest potash consumer for approximately seventeen consecutive years, which in his view supports continued interest from Chinese and other Asian investors, per Affidavit #1 of Wenye (Bill) Xue, Aug. 28, 2026, paras. 14–15.

The specifics run to five examples. A Chinese state-owned company controlling one of the largest potash producers in China, targeting some 5 million tonnes of new capacity over five years, signed a memorandum of understanding on or about September 27, 2025, has attended the site several times and met Saskatchewan government departments — but has not advanced to a binding term sheet. Since about March 2026 the company has been in discussions with a Shenzhen-listed producer operating roughly 2 million tonnes of capacity outside Canada. There is a major Chinese mining group internally reviewing a combination with its own Canadian potash project. Nine US special purpose acquisition companies have been approached, one of which delivered a preliminary offer on August 27, 2026. And a European investment platform of Chinese background is preparing a debt restructuring plan, per Affidavit #1 of Wenye (Bill) Xue, Aug. 28, 2026, para. 25.

On the mineral leases that carry the project — a renewable Subsurface Mineral Lease KLSA 008 issued by the Saskatchewan Ministry of Energy and Resources, plus freehold leases — Mr. Xue deposes that the company failed to make the payments due May 18 in 2025 and 2026, but had initiated discussions with the province and holds an agreement extending those payments to September 30, 2026, exhibiting an email of February 13, 2026 from the Ministry confirming it, per Affidavit #1 of Wenye (Bill) Xue, Aug. 28, 2026, paras. 37–41. On money, he says the debtors are seeking interim financing elsewhere and that counsel had spoken with two potential alternative interim lenders who expressed an interest in providing a term sheet of US$6 million to US$10 million, per Affidavit #1 of Wenye (Bill) Xue, Aug. 28, 2026, para. 44.

The legal argument in the application response is that the threshold for a super-monitor has not been met. It cites Hudson's Bay Company (Re), 2025 ONSC 5998, in which the court declined to expand a monitor's powers so that it could assume all the functions of management, observing that such relief "would have practically the same effect as the removal of the directors," and that super-monitor powers "remain the exception and not the rule"; Quest University Canada (Re), 2020 BCSC 318, on the burden of showing that a board is unreasonably impairing a restructuring; Mantle Materials Group, Ltd (Re), 2024 ABKB 19, on the applicant's burden to establish that its approach will be more effective; and Pascan Aviation inc. (Arrangement relatif à), 2015 QCCS 4227, where the court held that "collaboration is required, not coercion." Management, the debtors submit, has acted in good faith and with due diligence, per Application Response of the Debtors, Aug. 29, 2026, Part 5, paras. 1–6.

The answer filed two days later

The monitor's supplement, filed on the morning of the hearing, set out concerns about the company's conduct during the pre-filing strategic process that FTI Capital Advisors ran for ten months. The company, it says, was running a parallel sales process that could be seen as designed to preserve value for its shareholder, kept that process separate from the sales advisor, and so left the monitor without enough information to verify the matters Mr. Xue described. It says the company modified the standard non-disclosure agreement in a way that had the effect of excluding certain parties, and insisted on using its own data room although the sales advisor had established one. And it describes a party it identifies as one of the largest producers of potassium chloride in the United States, which made multiple diligence requests, waited three weeks on unanswered questions, was then told it would get the detailed information only after it made an offer, and walked away, per Supplement to the First Report of the Monitor, Aug. 31, 2026, paras. 7–8.

On the alternative financing, the supplement is short: the descriptions in the Xue affidavit identify no source of funds, no proposed terms, no timetable, and no term sheet had been provided to the monitor or the court, per Supplement to the First Report of the Monitor, Aug. 31, 2026, para. 10. Appian's second affidavit, affirmed the same day, says a letter from a third party contemplating an interim facility had arrived the day before, non-binding, without material commercial terms, tied to a single restructuring option, and requiring priority ahead of Appian's pre-filing security, which Appian would oppose, per Affidavit #2 of Timothy Mister, Aug. 31, 2026, paras. 18–19. The parallel solicitation, Mr. Mister deposes, appears primarily targeted at structures that would preserve existing equity and at counterparties originating in the Chinese market; management "cannot be permitted to leave Appian's collateral at risk in search of an equity-preserving transaction," per Affidavit #2 of Timothy Mister, Aug. 31, 2026, paras. 10–11.

What the order does to the company's lawyers

Justice Stephens granted both orders. The stay now runs to and including December 18, 2026; borrowings under the Appian facility rise from US$1,000,000 to US$6,000,000 plus interest, fees and expenses; and the monitor's enhanced powers survive intact, exercisable to the exclusion of the debtors and their past and present directors, officers and shareholders, and expressly paramount to the authority of the debtors or any other person, per Amended and Restated Initial Order, Aug. 31, 2026, paras. 15, 25, 38.