Canstar Restorations placed into receivership with sale to Premium Restoration pending

Canstar Restorations Limited Partnership, Canstar Restorations GP Inc. and L.U.N.A Restorations Inc. were placed into receivership on September 28, 2026, on application by Bank of Montreal. The proceedings are intended to complete a pre-negotiated sale of the restoration business to Premium Restoration Ltd. under a September 15 share purchase agreement and proposed reverse vesting order. AlixPartners as receiver is scheduled to seek approval of the transaction on October 8.

Canstar operates a property restoration and remediation platform across British Columbia, Alberta and Saskatchewan, providing services that include emergency restoration, water and storm damage restoration, fire-related work, hazardous materials removal and mould remediation. The business is headquartered in Coquitlam and, before the receivership, operated from 15 additional leased locations, including three that had been vacated and for which rent was no longer being paid. Canstar's wholly owned LUNA subsidiary includes the ABK Restoration Services, Norhaz Solutions, Universal Restoration Systems and Lydale divisions. The group had approximately 339 employees, consisting of 113 salaried and 226 hourly workers.

The companies were placed into receivership after several years of significant losses and mounting liquidity pressure. Sales declined to approximately $76 million in fiscal 2025 from approximately $84.8 million in 2024, while the group recorded net losses of approximately $6.8 million in 2024, $30.5 million in 2025 and $7.3 million during the first 6 months of 2026. By June 30, the accumulated deficit had reached approximately $70 million. The 2025 results included material accounting restatements relating to that year and prior periods. The business also faced working-capital pressure from lengthy collection periods. It had approximately 680 customers, primarily insurers and independent adjusters, with collection periods commonly exceeding 90 days and stretching further on larger claims.

The deterioration left Canstar fully drawn on its BMO operating facility and in default for several months. As of September 16, more than $16.85 million was outstanding under BMO's operating, term and other facilities. As of June 30, the companies also owed more than $23.4 million to Fulcrum Capital Partners and Canstar Construction Ltd. under subordinate secured debt instruments, while a Fulcrum affiliate held an additional $5 million security interest arising from its participation in the BMO facilities. Suppliers and service providers were owed approximately $13.6 million as of June 30, with 30% of vendor payables more than 120 days old and 19 litigation actions pending against certain Canstar entities.

BMO initially agreed to forbear from enforcement until after March 31, 2026. That arrangement was extended to July 31 on April 21, subject to Canstar pursuing a sale process, and was extended again on August 14 to September 30 or an earlier date determined by BMO. Summit Cap Advisors Ltd., which had been retained on April 21, launched the sale process in May under AlixPartners' oversight. More than 50 prospective strategic and financial purchasers were contacted, 33 executed confidentiality agreements and four submitted letters of intent. Premium's proposal was ultimately selected as the best offer.

Canstar and Premium executed the SPA on September 15. The purchase price and deposit remain sealed, although AlixPartners said the transaction is expected to repay BMO in full while leaving Fulcrum and Canstar Construction with substantial shortfalls. The receiver's liquidation analysis found that realizations from a liquidation would be substantially below those available under the Premium transaction. The deal would preserve the business as a going concern and continue employment for substantially all employees. It also retains liabilities owed to trades and operating vendors working on active projects, while excluded assets, contracts and liabilities would be transferred to a newly incorporated residual company.

The parties are proposing to implement the sale through an RVO because dozens of Canstar's customer contracts require consents or waivers before they can be transferred, and obtaining those approvals through a conventional asset sale would create delay and additional cost at a time when no funding is available to absorb continued operating losses. The SPA has an outside date of October 30.

AlixPartners is the receiver. Counsel includes Lawson Lundell for BMO, Fasken for the receiver and BLG for Premium Restoration.