XTM: a float of other people's tips

The appearance list is the story before you read a word of the reasoning. Eight banks, a DIP lender, a monitor with two sets of counsel — and then a winery, a brewery, a pub, and a dozen restaurants, several of them appearing not through lawyers but by a representative giving their own name.

XTM Inc. v. The Royal Bank of Canada, 2026 ONSC 3921, is about $1.5 million. It reads as though everyone in the room knew it was about more than that.

What the platform did

XTM Inc. is a Canadian financial technology company. For about six years it has given its customers — the Merchants, mostly in hospitality, personal care, retail and services — access to the EveryDay Platform, used to distribute funds, typically gratuities or tips, to their employees and other workers in real time, per Endorsement of Black J., July 6, 2026, para. 4.

The mechanism matters to everything that follows. A Merchant loads funds into a bank account held by XTM using pre-authorized debit — PAD — transactions. Those funds are then transferred to accounts linked to the End Users, who can access their tips instantly with an associated payment card. Contributions, transfers and withdrawals are tracked on a ledger, and an individual Merchant's ledger account is sometimes called a "wallet", per Endorsement of Black J., July 6, 2026, paras. 5–6.

Until January 27, 2026 the platform ran a prepaid float model supported by a credit facility from Pateno: each Merchant selected a target float and gave XTM PAD authorisations letting that float be replenished frequently — daily or weekly — as funds were needed to pay tips out, per Endorsement of Black J., July 6, 2026, para. 7.

A wallet is a ledger entry. The money it represents sat in XTM's account.

The shortfall

Justice Black's summary of what went wrong is notable for how little of it is settled:

"While the appeal and ostensible utility of this system is evident, for reasons that have not yet been comprehensively investigated or determined, over time the Applicants… accumulated a deficit in Merchant funds which by September 30, 2025 totaled approximately $18.75 million."

And the range of possible causes is stated without choosing between them: "from negligent operation and monitoring of the PAD system to fraudulent diversion or misappropriation of funds by one or more participants in the scheme", per Endorsement of Black J., July 6, 2026, paras. 8–9.

Eighteen and three-quarter million dollars of money that merchants had paid in to be handed to their staff as tips, missing, cause undetermined. Once the shortfall was recognised, the applicants partnered in the autumn of 2025 with EPFC and transitioned XTM's payment service provider obligations and compliance requirements across to it, per Endorsement of Black J., July 6, 2026, para. 10.

The CCAA proceedings followed on February 27, 2026, before the same judge who decided this motion, per Initial Order, February 27, 2026.

The motion

The Monitor, The Fuller Landau Group Inc., brought a motion for advice and direction about approximately $1.5 million in "Chargebacks" completed after the Initial Order — and, it was alleged, in breach of the stay of proceedings contained in it, per Endorsement of Black J., July 6, 2026, para. 1.

That is the collision. A chargeback is a mechanism of the payment card system: a cardholder disputes a transaction and the money is reversed back up the chain, by rules and contracts that operate automatically and without a court. A stay of proceedings is a court order freezing exactly that kind of self-help. When the entity in the middle of the chain files under the CCAA, the two systems give opposite answers about who is allowed to take money out of it.