SUPERIOR COURT OF JUSTICE – ONTARIO
(COMMERCIAL LIST)
RE: IN THE MATTER OF THE COMPANIES’ CREDITORS ARRANGEMENT ACT, R.S.C. 1985, C. C-36 AS AMENDED
AND IN THE MATTER OF A PLAN OF COMPROMISE OR ARRANGEMENT OF SRX HEALTH SOLUTIONS (CANADA) INC.
BEFORE: W.D. Black J.
COUNSEL: Monica Faheim, for the Applicants Steven Weisz and Dilina Lallani, for the Monitor Dan Wooton, Monitor Rory McGovern, for the DIP Lender Evan Cobb, for Gilead Sciences Canada, Inc. Marie Eve Montminy, for the Creditor Celltrion Healthcare Canada Ltd.
HEARD: May 20, 2026
ENDORSEMENT
Overview
1This was a motion by the applicants SRx Group (in this endorsement I will use terms as defined in the parties’ materials and in my earlier endorsements in this matter) seeking:
(a) Approval of a distribution of the Remaining Proceeds;
(b) Approval of targeted releases in favour of individuals who are said to have been instrumental to the restructuring.
(c) Approval of the Monitor’s reports, activities, and fees (and the fees of its counsel); and
(d) An order terminating these CCAA proceedings, including the discharge of the Monitor and the termination of remaining charges.
2All but the first two items are uncontested.
Issues Regarding the Proposed Distribution
3With respect to the proposed distribution of the remaining proceeds, the Monitor raised a concern, based in part on its discussions with various parties including certain creditors and the DIP Lender, that “there is ambiguity in the interpretation of the DIP Term Sheet” and that “there could be sharing of proceeds which would result in a lower distribution to the DIP Lender” (i.e. as compared to the position of the SRx Group and the DIP Lender on an appropriate distribution).
4The Monitor hastened to add that, as an independent party, it takes no position on the Applicants’ proposed distribution, and pointed out as well that it had advised the Department of Justice (Canada) (for the CRA) of the Monitor’s views, and the potential distribution outcome.
Lack of Opposition to Proposed Distribution
5However, notwithstanding the Monitor having appropriately raised its concerns for further consideration and potential submissions by any party who shared the concern, in the result there was in fact little meaningful opposition to the proposed distribution.
6The reasons for that are perhaps manifold, but fundamentally it seems to relate to the fact that, even if the “sharing of proceeds” position identified by the Monitor were to carry the day, the amount of money that would land in one pocket versus another would be vanishingly small.
7The only party notionally on the “sharing of proceeds” side of the debate who showed up, the creditor McKesson Canada Corporation, confirmed that given the exceedingly modest amount at stake, it was not proposing to make any submissions relative to the distribution issue, and would instead focus on the release issue (about which more below).
8The other parties potentially interested in the distribution issue, the creditor National Bank of Canada (NBC) and the Department of Justice (Canada) (on behalf of the CRA) did not attend nor make any submissions on this topic.
9In the result, the applicants’ position, joined by the DIP Lender, was effectively unopposed.
The Applicants/DIP Lender’s Position
10Moreover, there is some merit to the applicants/DIP Lenders’ position.
11As counsel for the applicants emphasized, it is helpful, in order to consider that position in appropriate context, to recall the desperate circumstances that confronted the SRx Group leading to its application for CCAA protection at the outset of these proceedings.
12When I granted the Initial Order in this matter on August 21, 2025, , the SRx Group was operating on fumes, its liquidity crisis such that it was facing the immediate shutdown of its national network of specialty pharmacies and clinics, in turn jeopardizing the care and health of thousands of patients with complex and in many cases life-threatening conditions.
13As set out by way of reminder in the affidavit filed in support of today’s motion, the SRx Group was underway, in advance of the CCAA filing, with an extensive and urgent process to source interim financing. In the three days immediately preceding the CCAA filing, SRx Group management approached approximately 20 potential lenders, including the Applicants’ existing senior secured creditor, all of whom declined to provide financing in the face of the existential risks besetting the SRx Group at that time, and in the absence of conventional collateral or hard assets.
14The DIP Lender was the only party willing to provide financing in those dire circumstances.
15The DIP Term Sheet, which was clearly disclosed to all Stakeholders at the time of the Initial Order, included the priority charge up to $.4.1 million currently at issue. The DIP financing, combined with a concerted and intensive effort over a very tight timeline, allowed for an almost immediate succession of sale agreements and transactions in respect of numerous pharmacy and/or clinic locations, allowing for an orderly transition of patient care, and a parallel series of approval and vesting orders.
16It is fair to observe that the DIP Term Sheet, with its origins in those pressurized circumstances, was not a model of clear drafting. The operative phrase therein leaves open arguments for both of the competing interpretations potentially at play.
17However, in assessing the matter on a balance of probabilities, I note again that the SRx Group’s evidence and argument, and the companion argument of the DIP Lender, are essentially unopposed. Taking into account the language of the DIP Term Sheet and the commercial context in which it was hatched, I also find that the language of the DIP Term Sheet is consistent with the interpretation urged by SRx Group and the DIP Lender.
18Moreover, while clearly the Monitor harbours misgivings about the certainty of the SRx Group/DIP Lender’s interpretation, it has acknowledged in a fair and even-handed way the force of at least aspects of that interpretation. In its Sixth Report, the Monitor said:
“The Monitor understands the concerns of the secured creditors around fairness of the DIP Lender advancing $801,000 and seeking to recover $4.1 million after a 10-day sale process, Under almost all DIP lending circumstances, this would be considered extraordinary. However, the Monitor notes that the terms of the DIP Facility were finalized with input from NBC, that the DIP Term Sheet was approved by the Court, that the mechanics of the DIP Term Sheet and SRx’s intention to utilize sale proceeds to fund the CCAA proceedings ahead of future requests for DIP funding, were all pre-disclosed and reported to the service list and the Court, and notes that the Monitor is not aware of any actual breach of the DIP Term Sheet.”
Approval of Proposed Distribution
19While the distribution sought by SRx Group and the DIP Lender may seem to result in something of a windfall to the DIP Lender, it is also the case that the DIP Lender provided emergency financing when nobody else would, and that this financing allowed for a beneficial result for facilities and in particular for patients. The significant upside for which the DIP Lender says it bargained in those circumstances, while again not as clearly enunciated in the DIP Term Sheet as would be ideal, is conceivable and justifiable in those surrounding circumstances and, again in the absence of any contrary evidence and any concerted opposing submissions, I am prepared to uphold the position of SRx Group and the DIP Lender and order the distribution they seek.
Concerns About the Release Sought
20Turning to the form of release sought by SRx Group, the concern, expressed in particular in an email from counsel for NBC dated May 12, 2026 (and attached Appendix I to the Monitor’s Seventh Report, is twofold.
The Releasees
21I find that the second of those concerns, that the release extends to cover two representatives of SRx Group’s American parent company (in addition to two Canadian representatives), is satisfactorily addressed in the evidence of SRx Group on this motion.
22That is, the affidavit of Michael Young sworn May 11, 2026 deposes that both such representatives of the parent company made significant and material contributions to the restructuring and ultimately to the expedited Sale Process, and provides some details as to the nature and extent of those contributions.
23Again, there is no evidence to the contrary, and in my view the uncontradicted evidence satisfies various of the non-exhaustive factors enumerated by Morawetz CJC (as he then was) in Lydian International Limited (Re), 2020 ONSC 4006, para 54. I am prepared to confirm that the two representatives of the parent company (along with the two Canadians) are covered by, and to the extent of, the releases to be granted.
The Scope of the Releases
24As to the scope of the proposed third-party release language, however, I agree with the observation in a May 12 email in the record, from NBC’s counsel, that the scope is impermissibly broad.
25That language proposes that the Released Parties:
“Shall be deemed to be forever irrevocably released and discharged from any and all present and future claims, liabilities, demands, actions, causes of action, damages and obligations of any kind or nature whatsoever (whether direct or indirect, known or unknown, contingent or absolute), based in whole or in part on any act or omission, transaction, dealing or other occurrence existing or taking place prior to the filing of the Termination Certificate and in any way relating to the Applicants, their business, assets or operations, or these CCAA proceedings.”
26Counsel for SRx Group argued that, in effect, NBC’s position that this language is “impermissibly broad” ought to be given little or no weight inasmuch as neither NBC nor its counsel had the “courage of their convictions” to show up and make submissions at today’s hearing.
27I disagree.
28On this issue in particular, this court is well-positioned and is required, even in the absence of submissions, to assess the appropriate extent of releases sought.
29As counsel for McKesson pointed out in his submissions, the starting point for the analysis is that releases must be seen as the exception rather than the rule. And, while again I am satisfied that the contributions of all four of the SRx Group releasees (including as noted the two representatives of the parent company) satisfy various of the Lydian factors, their respective contributions do not justify the broad scope of the proposed release as written.
30As noted in the email from NBC’s counsel, the proposed form of release “purports to provide a sweeping release to these four individuals for ‘any present and future claims…existing or taking place prior to the filing of the Termination Certificate and in any way relating to the Applicants, their business, assets or operations, or these CCAA proceedings.’” Counsel’s email continues that “This is not a case in which such relief is justified, especially considering that they are purporting to seek a release with respect to essentially anything that would have occurred prior to the filing of the Termination Certificate – even before the commencement of the CCAA proceedings.”
31In my view this is a fair characterization of the release proposed.
32In response, SRx Group’s counsel contended that the evidence indicates that the four individuals for whom the release is sought were engaged, even prior to SRx Group’s application for CCAA protection, in efforts to raise funds and otherwise to preserve operations and ensure patient safety.
33I accept that is likely the case, but that cannot justify the proposed scope of release that would reach back much earlier than those efforts, and release against anything and everything having to do with the SRx Group (other than fraud or willful misconduct, or the statutory limitations under s. 5.1(2) of the CCAA), even unrelated to the restructuring and refinancing efforts, or to the CCAA proceedings.
34In support of its suggested release language, SRx Group has also assembled a collection of releases granted by some of my colleagues and by me in past matters. As I read those releases, they appear in each case to tie back into the relevant proceedings (mostly CCAA proceedings) and to activities taking place within or in relation to or leading to such proceedings.
35Moreover, in the absence of context, the precedential force of such example releases is attenuated, and in fact underlines a concern that the granting of a release in one setting leads to an expectation that a similar, or incrementally broader release will be granted in another.
36I do not fault counsel for seeking to push the envelope, but this court cannot be seen to be, and must in fact be scrupulous to avoid, giving out releases like Halloween candy to whomever shows up at our door asking for them.
37To engage in unwarranted largesse in the dispensing of releases is to invite “release-creep” and to risk (or perhaps guarantee) that parties will show up with ever-more expansive requests.
Conclusion re Release Sought
38In this instance, I find and direct that the release language should be more precisely tied to the activities contributing to the CCAA proceedings, and cannot and should not purport to extinguish all claims for anything and everything to do with SRx Group for as far back in time as that entity has existed and operated.
39I am prepared to grant the remaining relief sought, which as noted is not opposed by anyone. It will also lead to a termination of these proceedings.
40Accordingly, I ask counsel for SRx Group to prepare and circulate to the Service List and to me a form of order with an amended, narrowed form of release. Assuming I am satisfied as to the modified form, I will then sign the order including the amended language.
W.D. BLACK J.
DATE: MAY 20, 2026