Following filing for creditor protection earlier this month, Noya Holdings Inc. and Noya Cannabis Inc. are seeking approval of a stalking horse deal for approximately $3.8 million from an unnamed company.
The company is also seeking an order extending the stay of proceedings to and including March 7, 2025.
Filed on behalf of Noya on November 12, the document states that the stalking horse purchaser may be a related party to the company. A stalking horse bid is a bid on a bankrupt company’s assets and is the first bid offered to a bankrupt company before a public auction takes place.
Noya filed for creditor protection after its senior secured creditor, Lending Stream Inc., demanded payment and issued BIA notices regarding these debts in September. The owner of Lending Stream is the brother of the owner of the Applicants.
Another secured creditor that provided loans to NHI 1955185 Ontario Inc. is another secured creditor. As of September 30, 2024, 195 had loaned approximately $3.8 million to NHI, the approximate dollar figure associated with the proposed stalking horse deal. The numbered company is owned or controlled by the parents or relatives of the owner of the applicants.
A stalking horse agreement is usually structured as a purchase of the company’s retained assets by way of a share sale and “reverse” vesting approval order.
The proposed timeline of the stalking horse sales process is a notice of sales process published on December 6, 2024, finalizing the schedule of assumed liabilities in the stalking horse agreement by December 31, 2024, with a bid deadline of January 27, 2025, an auction on Wednesday, February 5, 2025, and a hearing of the ale approval motion no later than February 14, 2024.
Noya also seeks $400,000 to be made available through a DIP loan for the company’s operation throughout the sale process. The company argues that without the loan, it will be unable to continue to operate or complete the sale.
Noya Holdings Inc. (NHI) and Noya Cannabis Inc. have applied for creditor protection in an initial order posted on November 6, 2024. Noya’s monitor in the case is BDO Canada Limited.
NHI is the holding company, and through its wholly-owned subsidiary, NCI, it operates a cannabis manufacturing and production business. The affidavit of Noya CEO Zaid Reda says the company’s business has focussed primarily on being a wholesale business-to-business service or product provider over time. The company is insolvent and faces liquidity challenges. A motion record for the company says the primary value of Noya is “dependent on a few, key, large customers and derived from its ability to seamlessly and continuously fulfil the order requirements of these key customers.”
If it is unable to continue operations, it could lose these key wholesale customers.
NCI currently employs 18 employees. The unnamed stalking horse purchaser is expected to maintain the employment of “substantially all” of the employees.
NCI blames its current position on “lower than expected demand, oversupply and downward price pressure in domestic markets.” as well as the ongoing illegal cannabis market which it says has impacted demand for legal products.
NCI’s federal cannabis production licence from Health Canada is currently scheduled to expire on December 21, 2028.
