The Ontario Securities Commission (OSC) granted a partial revocation of a cease trade order (CTO) that was initially issued against Sunniva Inc. due to the company’s failure to file certain continuous disclosure documents. The partial revocation was requested by KPMG Inc., acting as the court-appointed receiver and manager for Cura-Can Health Corp. and The Clinic Network Canada Inc., to allow the sale of Sunniva shares held by Cura-Can to Avonlea-Drewry Holdings Inc. (ADH) as part of a debt reduction agreement.
The CTO was originally issued on June 22, 2020, and partially revoked on April 26, 2021, to allow Sunniva to issue shares to unsecured creditors under a plan of compromise and arrangement pursuant to the Companies’ Creditors Arrangement Act (CCAA). Cura-Can, which holds approximately 6.3% of Sunniva’s shares, defaulted on a loan from ADH, leading to the appointment of KPMG Inc. as the receiver.
The OSC’s decision to partially revoke the CTO was based on several factors, including ADH’s status as a sophisticated investor, the absence of undisclosed material information about Sunniva, and the understanding that the shares would remain subject to the CTO post-sale. The sale is conditional on the partial revocation of the CTO and is not contingent on a full revocation.
The OSC’s order, made under subsection 144(1) of the Securities Act, R.S.O. 1990, c. S.5, as amended, stipulates that KPMG Inc. must provide ADH with copies of the CTO and the partial revocation order and obtain a signed acknowledgment from ADH regarding the ongoing effect of the CTO before the sale can proceed. The OSC made this decision on July 29, 2022, concluding that the partial revocation would not be prejudicial to the public interest.