Xplore: why the court let a day-one DIP take out the bridge loan

Xplore Inc.'s initial order, signed by Justice Dunphy of the Ontario Superior Court of Justice (Commercial List) on November 10, 2026, authorizes and directs the company to pay everything owed under its bridge loan out of the initial spectrum advance under a debtor-in-possession facility approved the same day, and declares the bridge's security "indefeasibly released and discharged" on receipt, per the Initial Order, Nov. 10, 2026, paras. 10(a), 34. In written reasons signed the next day, the judge said why: "Approving use of a DIP as 'take out financing' in a Day 1 order is far from an easy call for a judge to make but no other course is or ever was reasonably practicable," per the Endorsement of Justice Dunphy, Nov. 11, 2026, para. 18.

The filing and the DIP's terms were reported here on November 12. The reasons take up "certain relatively uncommon or unusual features of the initial order granted – none of which are precedent-setting, but many of which are sufficiently rare to require explanation," and say the views of the monitor and the chief restructuring officer "were of great assistance" in examining the "potentially controversial or unusual aspects of the relief sought," per the Endorsement, paras. 3, 6.

The bridge under s. 11.2(5)

A condition of the DIP as proposed, the reasons say, including the funding available before the comeback hearing set for November 19, was that the bridge "be repaid in full immediately upon approval of the Initial Order by me by an advance under the DIP." Section 11.2(5) of the CCAA, as the reasons put it, requires the judge "to be satisfied that interim financing arrangements are limited to what is reasonably necessary for the continued operations of the debtor companies in the ordinary course of business during the interim period prior to the come-back hearing." The reasons put the bridge at approximately $50 million, "a large sum of money to characterize as reasonably necessary," and find that "in the circumstances of this case" the applicants discharged their burden, per the Endorsement, para. 17.

In reaching that conclusion the reasons note six points, lettered (a) to (f). Continued funding, they say, "is utterly necessary"; the bridge "is itself priority funding with a priority substantially similar to that which will be applied to the DIP facility - in effect the repayment of the Bridge Facility simply converts one form of super-priority debt into another with different holders"; and repayment is a condition of the DIP lenders, not of the bridge lenders alone, one "supported or unopposed by the secured lenders under the 2024 Credit Facilities which amount to over $540 million in secured debt (excluding the Bridge Term Loan)," per the Endorsement, para. 17(a)–(c).

They add that representatives of "the great bulk of the secured lenders affected" by the security granted for the bridge repayment had notice of the condition and either support it or do not oppose it, and that the interim priority "appropriately mitigates the impact" on other stakeholders, the fibre entities' lenders among them. The last point puts the chance of any alternative interim funding in a reasonable time "somewhere between slim and practically impossible." Bringing a new super-priority lender into "the complex, layered capital structure of these businesses," the reasons say, would have been "a nearly impossible exercise," and the attempt "would have risked shattering the fragile consensus" that the pre-filing negotiations forged, per the Endorsement, para. 17(d)–(f).

"Section 11.2(5) is intended to be a practical guideline to be applied sensibly and pragmatically," the reasons go on. "I am fortified in my conclusions by a review of the reasons of Pepall J. (as she then was) in Canwest Publishing Inc., 2010 ONSC 222 (CanLII) at paras. 41-46." The DIP's interim terms, they add, "have been crafted to minimize or eliminate as far as practicable any impact upon the position of any secured creditors not 'at the table' for this initial hearing," per the Endorsement, para. 18.