Xela: no bids for the shares, so the receiver asks to leave holding them

Xela Enterprises Ltd. is, in the Court of Appeal's description, "a privately-owned Ontario family holding company," the parent of several subsidiaries operating mainly in Central and South America, per Xela Enterprises Ltd. (Re), 2024 ONCA 141, Feb. 28, 2024, para. 2. Until 2016 a Barbados subsidiary held the companies behind Arturos, a chain of 90 fast-food chicken restaurants in Venezuela. Through Panamanian holding companies, chiefly Lisa S.A., Xela held what the receiver in 2019 called its most significant asset: an indirect one-third of the Avicola Group, a Guatemalan poultry business that the family's patriarch divided equally among his three children in 1978. A dispute arose in 1998 over whether the cousins believed to own the other two-thirds were concealing the group's results from Lisa; the Avicola Group had paid Lisa no dividends since, and by the receiver's 2019 account Lisa was party to more than 100 lawsuits in Canada, Florida, Panama and Guatemala over dividends of approximately US$360 million, per the First Report of the Receiver, Oct. 17, 2019, s. 1.0, paras. 8–12, s. 3.0, paras. 2–4 and s. 4.1, para. 3.

On September 21, 2026, the court-appointed receiver of Xela, AlixPartners Restructuring, Inc., formerly KSV Restructuring Inc., served an amended motion to be discharged. The sale of Xela's shares that Justice Kimmel approved on July 10 was built around the four parties the receiver considered the only realistic buyers, and "the Receiver received no bids during the Sale Process," the amended notice says; the receiver "is without funding to continue these proceedings," per the Amended Notice of Motion, Sept. 21, 2026, grounds paras. (j)–(l). It asks to leave with two charges that would run "indefinitely": one over Xela's shares and subsidiaries for its own fees, and one over the property of Xela's president for his unpaid costs orders, per the Amended Notice of Motion, Sept. 21, 2026, relief paras. (a)(ii)–(vi). The motion is set for October 22, 2026, before Justice Kimmel of the Commercial List, by videoconference.

A judgment, a family, and a receiver

The application that became this receivership was started on January 18, 2011 by the applicant against Xela, her father, since deceased, and her brother. Judgment issued on October 28, 2015: Xela, the brother and the father became jointly obligated to pay her approximately $5 million, plus interest and costs, per the Sixth Report of the Receiver, Apr. 14, 2026, s. 1.1, paras. 1–2. The brother, the Court of Appeal records, is Xela's sole common shareholder, a director and, since August 2000, its president, per 2024 ONCA 141, para. 2.

On January 15, 2019 the judgment creditor applied for a receiver under s. 101 of the Courts of Justice Act. Xela answered with an application under the CCAA on June 17, 2019. On July 5, 2019 the court dismissed it and appointed KSV Kofman Inc. as receiver and manager, with the judgment creditor funding the proceeding through receiver's certificates; there was "presently no source of liquidity in the Company" to pay for it, per the First Report of the Receiver, Oct. 17, 2019, s. 1.0, paras. 4–6 and s. 6.0, para. 4. Xela's latest statements then, unaudited and unconsolidated at May 31, 2018, showed assets of $22,755,000, of which $22,485,000 were advances to related parties, against liabilities of $83,075,000, of which $72,944,000 was due to related parties; they left out the debt to the judgment creditor, per the same First Report, s. 3.1, paras. 3–4.

The Sixth Report names three principal transactions the receiver set out to review. In early 2016 Xela's Barbados subsidiary conveyed the shares of the two companies behind the Arturos business to the father, who passed them to the ARTCARM Trust in Barbados, whose beneficiaries the receiver identifies as the president's wife, mother and children; in January 2018 Lisa assigned the majority of the proceeds of the Avicola litigation to one of those companies, BDT Investments Inc.; and, during the receivership, Lisa's Avicola stake itself passed to BDT. "Based on the Receiver's investigations, these transactions appear to have transferred all value out of the Company and its direct subsidiaries," the Sixth Report says. In December 2021 the receiver issued a statement of claim against the president, members of his family and related entities alleging breach of fiduciary duty, oppression, fraudulent conveyances and conspiracy, which it has not advanced for want of funding, per the Sixth Report, s. 2.2, para. 2 and s. 2.3, paras. 1–4. The president's account of the 2020 transfer is that Lisa gave up its Avicola interest and the dividend claims to BDT "in satisfaction of longstanding litigation funding obligations," per his Responding Party's Factum, June 23, 2026, para. 14.

Contempt, and the costs that were not paid

In 2022 the receiver moved for contempt. Its complaint, as the Sixth Report describes it, was a declaration the president swore in Guatemala, which his brother-in-law then used, without the receiver's consent or the court's leave, to start criminal proceedings in Panama against the receiver's Panamanian lawyers, Hatstone Lawyers. The court found him in civil contempt of the appointment order in a decision dated June 29, 2022, per the Sixth Report, s. 2.4, paras. 1–2. The sanctions were 30 days' incarceration and the receiver's costs of the contempt proceedings on a full indemnity basis, $563,485.12. When the Court of Appeal dismissed his appeal he was ordered to pay another $40,000. After what Justice Kimmel called "a later failed attempt to replace the Receiver," he was ordered to pay $30,092.10 in costs and to post $100,000 as security for costs. "None of those costs amounts have been paid or posted," per the Endorsement of Justice Kimmel, June 24, 2026, para. 4.

The Court of Appeal, dismissing the appeal on February 28, 2024, recorded the motion judge's finding that his conduct was "blatant, deliberate, wilful and …unrepentant," per 2024 ONCA 141, para. 94. With a further $5,000 awarded by the Divisional Court and post-judgment interest at 4%, the receiver puts what he owes it in costs at $719,370.45 as of March 31, 2026, per the Sixth Report, s. 2.4, paras. 3–5 and n. 5.

Four buyers, no bids

The judgment creditor funded most, but not all, of the receiver's fees and costs from its appointment; after the contempt proceedings ended she stopped, "but for one payment that was not sufficient to bring the Receiver current on its fees and costs," per the Sixth Report, s. 2.5, paras. 1–2. The receiver's attempts to settle the Avicola litigation with her, her brother and the cousins failed. "In the absence of funding, it is appropriate that these proceedings be concluded," it wrote in April, per the Sixth Report, s. 2.5, paras. 3–4.

The instrument it chose was Xela's own shares, sold through a reverse vesting order so that a buyer would take whatever interest Xela may have in its Panamanian and Barbadian subsidiaries without the receiver first having to resolve the Avicola litigation, with the proceeds and Xela's unassumed liabilities left in a new residual company. It named four possible buyers: the cousins; the president; the judgment creditor; and Arturo's Technical Services Ltd., an Ontario company the receiver describes as run, or formerly run, by the president's sons. Marketing the shares more widely "would be a waste of time and money," the receiver said, since any stranger to the dispute would face "significant informational, legal and jurisdictional barriers," per the Sixth Report, s. 3.0, paras. 1–3. Bidders would have 30 days. The judgment creditor could credit bid her advances under the receiver's borrowing charge, but only with cash equal to the unpaid fees of the receiver and its counsel and an accrual for the cost of finishing the proceedings, per the Sixth Report, s. 3.0, paras. 4–6. Justice Kimmel later called the structure "unique and largely a function of the litigation that Xela is involved in," per the Endorsement of Justice Kimmel, June 24, 2026, para. 2.