World Energy GH2: the monitor's sale, on a shareholder-linked loan

When the Government of Newfoundland and Labrador opened Crown land to wind developers in February 2023, World Energy GH2 came away with a reservation of approximately 108,000 hectares and the exclusive right to develop on it: industrial-scale wind generation feeding a green-hydrogen facility, with the Port of Stephenville as the hub. The reservation began in August 2023 and was extended twice, finally to Saturday, February 28, 2026. On February 19 the Province said it would not be renewed. The group was approximately CDN$10,500,000 behind on fees invoiced at approximately CDN$390,000 a month, and it understood that "being current would likely have resulted in renewal," per the first Affidavit of Richard Hugh, chief executive officer, Feb. 26, 2026, paras. 12–15, 49–50, 53.

On February 27, the day before the reservation was due to lapse, the Supreme Court of Newfoundland and Labrador in Bankruptcy and Insolvency, court file 2026 01G 1079, granted the eight companies of the WEGH2 Group an initial order under the CCAA and appointed Grant Thornton Limited as monitor. Its most unusual paragraphs were aimed at the Province. "[N]otwithstanding the expiry date of 28 February 2026," the Crown land reservations and permits were preserved and the running of time against them suspended, and the Province could not, without leave, refuse to renew them or let them lapse "on the basis of any pre-filing arrears or defaults." The stay, to March 9, also covered the shareholders against claims derived from the companies' obligations, per the Initial Order, Feb. 27, 2026, paras. 11, 14–15, 20–21.

Five months later the argument is over who runs the sale and who pays for it. On July 21 the monitor reported a court-approved interim loan from Northern Sky Holdings, LLC, a lender it had told the court was not at arm's length, "involving at least one of the existing shareholders of the WEGH2 Group," and a monitor-run sale process with letters of intent due October 15, 2026, per the Further Supplemental Third Report, July 21, 2026, paras. 1, 4 and Apps. "A"–"B", pp. 5, 8.

A reservation, a port and a lender's money on deposit

The group's account of itself begins with the war in Ukraine. Germany's search for alternatives to Russian energy after February 2022 produced a Canada–Germany declaration of intent on a green-hydrogen alliance, Mr. Hugh swears, and the Province had ended a moratorium on wind development in place since 2007; the business began in 2022. On April 9, 2024, the Province released the partnership from environmental assessment. The affidavit calls the project the most advanced of its scale in Newfoundland toward being construction-ready, and puts the capital invested in it at approximately CDN$120,000,000. The port generates approximately CDN$400,000 in annual revenue, per the Hugh Affidavit, Feb. 26, 2026, paras. 9–12, 16–18, 51. The group bought it in June 2023: a quay 293 metres by 20 metres, 10.1 metres of water dockside, a turning basin for ships up to 385 metres, per the monitor's Solicitation Letter, July 17, 2026, p. 1.

The company attributes its insolvency to a hydrogen market that "did not materialize" and to EDC funding that was not released. In late 2024 the partnership held CDN$47,853,000 of EDC loan proceeds on deposit, restricted to capital expenditure; EDC released CDN$6,835,255 for operations on condition that the balance go back to its accounts, which the group did in December 2024, and in February 2025 declined to release more. A June 2025 request for CDN$20,505,435 was declined on February 19, 2026. The fee arrears were to have been cleared under a framework the Province accepted in August 2025, "predicated on EDC providing additional funding," per the Hugh Affidavit, Feb. 26, 2026, paras. 38, 40–41, 44, 55.

Mr. Hugh puts assets at approximately CDN$29,249,000, most of it property, plant and equipment with a book value of approximately CDN$26,900,000, whose "economic value is closely tied to the development of the wind project on the Crown lands." Liabilities are approximately CDN$100,000,000: approximately CDN$50,000,000 to EDC, the partnership's "fulcrum senior secured creditor"; approximately CDN$15,000,000 owed by the parent, World Energy GH2 Inc., to Royal Bank of Canada; approximately CDN$15,000,000 in shareholder loans; approximately CDN$23,700,000 in trade payables including the reservation arrears; and CDN$2,383,242 in HST, per the Hugh Affidavit, Feb. 26, 2026, paras. 22–23, 25–30, 33. EDC's own figure, at March 12, 2026, is USD$35,919,142.21 in principal and interest under a credit agreement of February 22, 2024, per the Craig Affidavit, June 9, 2026, paras. 3, 5.

The group filed without interim financing, forecasting no need for it over 13 weeks, per the Hugh Affidavit, Feb. 26, 2026, paras. 80–81. The amended and restated initial order of March 9 added a $250,000 administration charge and extended the stay to April 27; an April 30 order extended it to June 10, per the Monitor's Third Report, June 8, 2026, paras. 4–5. "Absent the Leased Crown Lands, there is no Project," the monitor wrote in its first report, per the Monitor's First Report, Mar. 6, 2026, para. 35.

"Highly speculative"

On April 20 EDC called the plan to redesign the project and seek new provincial approvals "highly speculative" and said the next step "must be the immediate implementation of a fulsome sale or investment solicitation process." The company answered that a sale process "will disrupt and negatively impact" its talks with the Province "at a critical juncture," per the letters at Monitor's Second Report, Apr. 22, 2026, App. "C". The monitor sided with more time: the reservations and the port were "highly illiquid," and consultations with government "only move so quickly." Royal Bank of Canada, secured only at the parent, sued on personal guarantees in Ontario on April 10. The port's tenant, Radium North Inc., withdrew after an unsuccessful bid for contract work, and by late May the group had approximately USD$70,590, per the Monitor's Second Report, Apr. 22, 2026, paras. 18–21 and the Monitor's Third Report, June 8, 2026, paras. 15, 24.

Two loans for two plans

Both sides brought a loan to the June 9 hearing. The company's was CAD$1,100,000 from Brendan Paddick and Gene Gebolys at 13%, maturing June 3, 2027, with a charge ranking ahead of all security including EDC's and a stay to September 30. EDC's was USD$350,000 at 13% with a USD$35,000 commitment fee, about 10% of the facility; a stay to September 18; a two-phase sale process to launch by June 26; and enhanced powers for the monitor, including to sign the loan for the group and terminate employees; under EDC's forecast, everyone but the port staff would go, per the Monitor's Third Report, June 8, 2026, paras. 7, 51, 60, 63, 85.

Mr. Hugh described the two lenders as the majority shareholders of World Energy GH2 Inc., said they had offered to buy EDC's debt and been refused, and noted that their facility was "not conditioned upon a SISP or the displacement of the Applicants' management," per the Further Supplemental Hugh Affidavit, June 8, 2026, paras. 14, 16. It was to carry a revised plan to the Province and a memorandum of understanding with a potential offtake partner, whose identity the company asked the court to seal, per the Supplemental Hugh Affidavit, June 4, 2026, paras. 5–7. EDC said the strategy "has shown little tangible progress" and "is highly speculative," per the EDC Interlocutory Application, June 5, 2026, para. 13.

The monitor's third report backed EDC. The Province had told the monitor it could not support the company's application: the revised proposal it received on June 7 was substantially different from the project it approved, contemplated direct sales of electricity to third parties that current law prohibits, and proposed a debt-to-equity conversion that was "highly unlikely as the Province would be both regulator and an owner." The monitor called EDC's liquidating CCAA "not unreasonable," and added that it "would cease all activity on the Project and likely result in a substantial loss to EDC and no recovery to any creditor subordinated to EDC, whereas the Company's proposed path forward would keep that option open, however speculative a party may believe it to be," per the Monitor's Third Report, June 8, 2026, paras. 35–36, 94–95.