Court of Appeal for Ontario

Date: 2026-02-19 Docket: COA-25-CV-0799

Gillese, Coroza and Osborne JJ.A.

In the Matter of an Application Under Section 192 Of the Canada Business Corporations Act, R.S.C. 1985, C. C-44, as amended

And In the Matter of Rules 14.05(2) And 14.05(3) of the Rules of Civil Procedure

And in the Matter of a Proposed Arrangement of the Cannabist Company Holdings (Canada) Inc. and 16834434 Canada Inc., and Involving The Cannabist Company Holdings Inc, Patriot Care Corp., Curative Health LLC, Columbia Care DC LLC, Mission Bay, LLC, CCUT Pharmacy LLC, Columbia Care Pennsylvania LLC, Columbia Care Industrial Hemp LLC, Curative Health Cultivation LLC, Columbia Care NY LLC, Focused Health LLC, Columbia Care New Jersey LLC, Columbia Care WW Industrial Hemp LLC, CCPA Industrial Hemp LLC, CC OH Realty LLC, CCF Holdco LLC, CC California LLC, Columbia Care MD LLC, Columbia Care DE Management LLC, Columbia Care Delaware, LLC, and Columbia Care LLC

Counsel:

Joseph Groia and Yona Gal for the appellants, Murchinson Ltd., Nomis Bay Ltd., and BPY Limited

Lee Nicholson and Brittney Ketwaroo for the respondents, The Cannabist Company Holdings Inc., The Cannabist Company Holdings (Canada) Inc., and 16834434 Canada Inc.

Heard: February 10, 2026

On appeal from the order of Justice Jane O. Dietrich of the Superior Court of Justice dated May 21, 2025 with reasons reported at 2025 ONSC 3004.

Reasons for Decision

[1] The appellants appeal from the order of the application judge, a final order approving the respondents' plan of arrangement pursuant to s. 192 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44 (the "CBCA") and dismissing the appellants' oppression remedy application brought pursuant to s. 241 of the CBCA (the "Final Order").

[2] The respondent, The Cannabist Company Holdings Inc. (the "Company"), sought approval of a plan of arrangement permitting it to restructure $270 million of pari passu senior secured notes. The notes were issued in three series (2025, 2026 and 2027) pursuant to a common indenture.

[3] According to the terms of the indenture, all senior notes outstanding at any time ranked pari passu and were equally and rateably secured with all other outstanding senior notes, without preference, priority or distinction on account of the date of the issuance or maturity.

[4] The Company experienced significant liquidity challenges. Ultimately, it sought approval of an arrangement, the fundamental purpose and effect of which was to extend the maturity date of the notes and address the crisis caused by the lack of liquidity. Pursuant to the arrangement, each holder of 2025 notes and 2026 notes would exchange their notes for new notes, and each holder of 2027 notes could elect to exchange their notes for either the same consideration as that offered to the other series, or for new convertible senior notes.

[5] The application judge granted an interim order on March 28, 2025 (the "Interim Order") establishing the voting mechanics and voting classification for purposes of the meeting of senior noteholders. Importantly for the purposes of this appeal, and over the objections of the appellants, the Interim Order provided that all senior noteholders would vote as one class, but that the votes should be recorded separately by series.

[6] The meeting of senior noteholders was held on April 29, 2025, and voting proceeded in accordance with the Interim Order. A majority of the senior noteholders voting as one class approved the arrangement. Ninety-four percent of the outstanding senior notes were present in person or by proxy. Approximately 75 percent of the votes cast were in favour of the arrangement resolution although only 20 percent of the votes cast in respect of the 2025 notes were in favour.

[7] The appellants sought leave to appeal the Interim Order which was denied by this court on September 19, 2025.

[8] The application judge then granted the Final Order approving the plan of arrangement that is now the subject of this appeal. The application judge found that the statutory and court-mandated requirements were satisfied, and the arrangement was put forward in good faith.

[9] The issue before the application judge pursuant to s. 192 of the CBCA was whether the arrangement was fair and reasonable. The application judge found that it was, concluding that without the restructuring reflected in the arrangement, the company would not have the liquidity to repay the 2025 notes at maturity, resulting in cross-defaults under the other series of senior notes and the likelihood that the company would need to seek creditor protection.

[10] The application judge further found that since the terms of the indenture provided that in an insolvency proceeding, all senior noteholders would share the same collateral rateably and proportionately, any advantage of an earlier maturity date for the 2025 notes was illusory. Further, although extending the maturity dates of all senior noteholders to the same date resulted in a longer extension for the 2025 notes than the other notes, the 2025 noteholders received improved economic terms in the form of a higher interest rate under the new notes than that payable under the 2025 notes.

[11] Finally, the application judge found that the special committee established by the board of directors of the company undertook a thorough review of all potential alternatives, the company obtained a fairness opinion to the effect that the proposed transaction was fair, from a financial perspective, to the senior noteholders and shareholders, and that there were no better alternatives. Accordingly, the application judge found that the plan was fair and reasonable.

[12] The appellants did not seek a stay pending appeal of the Final Order, and the plan of arrangement was implemented and the transactions closed.

[13] For the reasons that follow, the appeal is dismissed.

[14] As a threshold matter, the respondents submit that the appeal is moot and represents a collateral attack on both the Interim Order and the decision of this court denying leave to appeal from the Interim Order. We agree with this submission.

[15] The appeal is moot since the plan of arrangement has closed and been implemented. The relief sought by the appellants would fundamentally undermine the effect of the plan, whether framed as an order compelling the company to repay the notes in full with interest or as an award of damages equal to that amount.

[16] The appeal is also a collateral attack on the Interim Order and the decision denying leave therefrom, since this appeal, at its core, is a challenge to the classification of three series of senior noteholders as one class for voting purposes at the special meeting: see Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at paras. 33-34. That voting classification was the primary effect of the Interim Order at issue.

[17] All the relief sought by the appellants on this appeal follows from that challenge to the voting classification: if the 2025 noteholders had been permitted to vote as a single class, separate from the 2026 and 2027 noteholders, the appellants submit that the contractual rights on which they rely and the reasonable expectations they assert in support of their oppression claims would have been fulfilled or met. The appellants do not allege any other unfairness or unreasonableness in the plan itself.

[18] In any event, nothing in the Final Order that is the subject of this appeal affects the classification of voting rights, and we see no reviewable error in that Final Order.

[19] That is sufficient to dispose of this appeal. Even if it were not, the application judge applied the correct test set out in s. 192 of the CBCA, and made factual findings with respect to the overall fairness and reasonableness of the plan and the lack of oppression.

[20] It is well established that s. 192 permits a corporation to make changes that affect the rights of the parties: BCE Inc. v. 1976 Debenture Holders, 2008 SCC 69, [2008] 3 S.C.R. 560, at para. 133. Indeed, the provision is necessary where it is not practicable for a corporation to effect a fundamental change in the nature of an arrangement under any other provision of the CBCA: see s. 192(3).

[21] Ontario courts have approved CBCA plans that impact voting rights, including voting thresholds provided for in the applicable indentures or other debt agreements: see e.g., Xplore Inc. (Re), 2024 ONSC 4593, 15 C.B.R. (7th) 301, at para. 75(c); and RGL Reservoir Management Inc. (Re), 2017 ONSC 7302 at para. 38.

[22] The findings of the application judge as to whether the arrangement was fair and reasonable were fact-specific and required the assessment of different factors in different situations: BCE, at para. 153. Those findings are entitled to deference from this court. We see no basis for appellate intervention.

[23] Moreover, the appellants do not appeal from the finding of the application judge that the company lacked the liquidity to pay out the 2025 notes on maturity. There was no dispute below, and there is no issue on this appeal, that under the terms of the existing indenture, in an insolvency all series of senior notes would be due and payable in full and senior noteholders would share the same collateral rateably and proportionately (subject to one exception regarding the 2027 noteholders not relevant to this appeal).

[24] The relief now sought by the appellants would effectively result in a preference for the 2025 noteholders, contrary to the terms of the existing indenture. It would also, as noted above, fundamentally undermine the plan, the specific objective and effect of which was to restructure the debt obligations and avoid an insolvency given the lack of liquidity to satisfy the 2025 notes, as found by the application judge.

[25] Finally, the application judge applied the correct test to evaluate the oppression claim. She found that there was no evidence to support a finding that it was a reasonable expectation of the appellants in the circumstances that the company had waived its right to apply to the court for approval of an arrangement pursuant to s. 192 of the CBCA. Again, we see no reviewable error in her analysis.

[26] Given our conclusions above, we do not find it necessary to address the appellants' "no-action" clause arguments.

Disposition

[27] For all of these reasons, the appeal is dismissed with costs to the respondents, fixed at the agreed-upon sum of $25,000, all inclusive.

"E.E. Gillese J.A." "S. Coroza J.A." "P.J. Osborne J.A."