VK Delivery-Moving Services et al-LK

VK Group

Overview

On May 16, 2025, V K Delivery & Moving Services Ltd. (“VK Delivery”), Product Line Holdings and Logistics Ltd. (“Product Line”), VK 24/7 Logistics Solutions Ltd. (“VK 24/7”) and, VK Linehaul Ltd. (“VK Linehaul”) (collectively, the “VK Group” or the “Petitioners”) obtained a court order (the “Initial Order”) from the Supreme Court of British Columbia (the “Court”) pursuant to the Companies’ Creditors Arrangement Act, R.S.C. 1985, c-36 (“CCAA”). Crowe Mackay & Company Ltd. has been appointed as Monitor.

The Initial Order provides, inter-alia, a stay of proceedings until and including May 26, 2025 (the “Stay Period”) and may be extended by the Court. During the Stay Period, all parties are prohibited from commencing or continuing legal action against the Companies and all rights and remedies of any party against or in respect of the Companies or its assets are stayed and suspended pursuant to the terms set out in the Initial Order.

On May 23, 2025, the Petitioners filed a Notice of Application returnable May 27, 2024 (the “Comeback Application”) seeking an amended and restated Initial Order (the “ARIO”) to provide for, among others, orders extending the Stay Period from May 26, 2025, up to and including June 25, 2025 (the “Stay Extension”), an administrative charge in the amount of $100,000 in favour of the Monitor, the Monitor’s counsel and the Petitioners’ counsel, and permission for the Petitioner to make monthly payments on the pre-filing arrears owed to ICBC.

On May 27, 2025, the Court granted the ARIO.

On June 20, 2025, the Petitioners filed a Notice of Application returnable June 25, 2025 seeking an extension of the Stay Period from June 25, 2025 up to and including August 25, 2025. The Royal Bank of Canada (“RBC”) the senior secured creditor filed an response to the June 20, 2025 application opposing the granting of the extension.

On June 25, 2025, Justice Basran adjourned the June 25, 2025 hearing to July 17, 2025. The Stay Extension was also extended to July 17, 2025 (the “Second Stay Extension“).

On July 15, 2025, the Petitioners filed a Amended Notice of Application seeking to modify the previously requested extension of the Stay Period from August 25, 2025 up to and including September 17, 2025.

On July 17, 2025, Justice Basran reserved his decision to grant the extension to the Stay Period to September 17, 2025 until the morning of July 21, 2025.

On July 21, 2025, Judge Basran granted the extension of the Stay Period to September 9, 2025 (the “Third Stay Extension“).

On September 4, 2025, the Petitioners filed a Notice of Application seeking an order to provide for, among other, order extending the Stay Period from September 9, 2025 to December 17, 2025 (the “Fourth Stay Extension”), extending the deadline to make payments for pre-filing arrears to ICBC to from August 15, 2025 to November 30, 2025, increasing the administrative charge from $100,000 to $200,000. The Petitioners are seeking the Fourth Stay Extension to finalize a financing agreement with BVD Group (“BVD”). On September 26, 2025, the Court granted the relief sought.

On November 28, 2025, the Petitioners filed a Notice of Application seeking an order to provide for, among other, order extending the Stay Period from December 17, 2025 to February 25, 2026 (the “Stay Extension”).

On December 9, 2025, the Court denied the Petitioners' Notice of Application to extend the Stay Period from December 17, 2025, to February 25, 2026. Consequently, a Receivership Order was issued, assigning the Petitioners into Receivership and appointing MNP Ltd. as the Receiver upon the Stay Period's expiry. The Petitioners sought an extension of the Stay Period until December 18, 2025, while they appealed to the Court of Appeal. However, on December 19, 2025, Judge Edelmann dismissed all grounds of the appeal, and the Petitioners were assigned into Receivership on that same day.

On April 23, 2026, Crowe filed a Notice of Application seeking an Order to. amongst other things, approve the activities of the Monitor, approve the fees and disbursement of the Monitor and, its legal counsel, Richard Buell Sutton LLP (“RBS”), the discharge of the Monitor from the CCAA proceedings, and a release in favour of the Monitor in respect of its conduct during the proceedings, save and except for claims arising from gross negligence or wilful misconduct. The application is currently scheduled to be heard on November 2, 2026.

On June 12, 2026 RBC filed an Application Response opposing the Monitor's discharge and fee approval application. Among other things, RBC alleged that the Monitor had failed to act reasonably and diligently in carrying out its duties throughout the CCAA proceedings and asserted that it intended to pursue claims against the Monitor and its counsel. RBC further opposed the approval of the Monitor's and RBS's fees, taking the position that the $50,000 retainer held by the Monitor should be paid to the Receiver and that any unpaid fees and disbursements should rank as unsecured claims in the VK Group's receivership and bankruptcy proceedings.

Concurrently, RBC filed a Notice of Application seeking, among other relief, broad document production and the right to examine representatives of the Monitor and RBS. RBC asserted that exceptional or unusual circumstances existed to justify such relief, including allegations that:

the Monitor and its counsel failed to respond adequately to RBC's requests for information and failed to issue material adverse change reports when required;
the Receiver's findings disclosed a materially different financial position than that presented by the Monitor, including alleged under-reporting of CRA source deduction liabilities; and,
the Monitor and its counsel were either complicit or willfully blind with respect to the VK "bad faith issues" identified by the Court.

(collectively, the "RBC Allegations").

On June 12, 2026, the Monitor filed an Application Response opposing RBC's application in its entirety. The Monitor and RBS took the position that information and examinations sought by RBC extended well beyond what was reasonably necessary for the assessment of the Monitor's and RBS's accounts and appeared directed toward investigating potential claims against the Monitor and its counsel. The Monitor and RBS further submitted that the fee affidavits and supporting materials already provided afforded RBC sufficient information to assess the fairness and reasonableness of the fees claimed. The Monitor and RBS also responded substantively to the RBC Allegations.

The RBC June 12, 2026 Application hearing was initially scheduled for June 15, 2026, but was subsequently adjourned to July 31, 2026. Submissions were made by counsel for the Monitor and RBC which occupied a full day hearing before Justice Basran on July 31, 2026 with Justice Basran reserving judgment.

On August 6, 2026, Justice Basran delivered oral reasons dismissing RBC's June 10, 2026 Notice of Application. The Court held that RBC had failed to establish the exceptional or unusual circumstances necessary to justify the extensive documentary production and examinations sought. In doing so, Justice Basran found, among things, that the Monitor understood and appropriately discharged its responsibilities throughout the CCAA proceedings, including its obligation to consider whether a material adverse change report was required. The Court accepted that the Monitor exercised its judgment appropriately in the context of an active restructuring involving a business generating approximately $3 million in monthly revenue while pursuing refinancing of approximately $8.35 million.

In addressing the RBC Allegations, Justice Basran found, among other things, that:

The Monitor appropriately balanced its supervisory responsibilities under the CCAA with RBC's requests for information, and counsel for the Monitor responded appropriately throughout the restructuring process;
There was no foundation for RBC's allegation that the Monitor had under-reported CRA's deemed trust claim relating to unremitted source deductions; and
RBC’s allegations that the Monitor failed to declare Material Adverse Changes under the CCAA at several points during the Monitor’s appointment were unfounded and did not give rise to RBC’s claims of maladministration on the part of the Monitor.

Justice Basran also noted that correspondence from RBC's counsel suggested that RBC was contemplating litigation against the Monitor and its counsel. The Court found that the broad documentary disclosure and extensive examinations sought by RBC appeared, at least in part, to be motivated by the potential pursuit of claims against the Monitor and its counsel rather than the proper assessment of the Monitor's fees. The Court concluded that such an approach was inappropriate in the context of a fee approval application and that the interests of justice favoured protecting the Monitor and its counsel from what had become adversarial proceedings.

Accordingly, Justice Basran held that RBC had not established the exceptional or unusual circumstances required to justify further document disclosure or broad examinations of the Monitor and it’s counsel. RBC was permitted to examine the Monitor and its counsel only on matters relevant to the fairness and reasonableness of the remuneration claimed, subject to any applicable claims of solicitor-client privilege. RBC's request for additional document production and broader examination rights, including examinations relating to the allegations underlying the purported "Bad Faith Issues," was dismissed.