Lion Force placed into receivership after court rejects last-minute CCAA bid

Lion Force Transport Inc., 2696942 Ontario Inc. and 2854233 Ontario Inc., a Brampton-based trucking group, was placed into receivership on May 15, 2026, on application by Royal Bank of Canada, owed approximately $53 million, with the Ontario Superior Court of Justice dismissing a competing application for protection under the Companies’ Creditors Arrangement Act brought by the companies.

Lion Force and its affiliates operate a trucking and logistics business headquartered in Brampton, with operations in the US through a US affiliate, operations in Mexico, and help desk employees in India. The group services clients across the Midwest and Southern US as well as Ontario and Quebec.

The financing relationship was anchored by a March 11, 2024 credit agreement and a September 9, 2024 amended and restated credit agreement. RBC holds security over each of the debtors, including a mortgage registered against the owned head office and truck depot in Brampton in the principal amount of $44.682 million.

According to RBC, the borrowers have been in default since September 2024. The defaults reportedly included an overdraft on Lion Force’s operating line, lease payment defaults, priority payables, term loan defaults, unpaid invoices owing to Fuller Landau in its role as RBC’s financial advisor, reporting defaults and covenant defaults. RBC first entered into a forbearance agreement on February 6, 2025, then amended, restated or extended the arrangements several times. Lion Force acknowledged its indebtedness and defaults through those agreements.

The last forbearance extension was scheduled to expire on March 31, 2026, but RBC’s position deteriorated before then. On March 2, RBC learned of previously undisclosed municipal property tax arrears of more than $500,000, later quantified in the application record as $547,783.87. RBC demanded payment on March 3 and served BIA notices at the same time.

RBC also relied on a series of operational and priority-payable concerns. Fuller Landau advised RBC that Lion Force had failed to meet payroll obligations to drivers in January 2026 and owed arrears to fuel suppliers. RBC later received a WSIB garnishment notice in the amount of $623,703.86 and was advised on April 29 that both of Lion Force’s receivables insurance policies with Export Development Canada had been cancelled, requiring a new application and payment of outstanding premiums to reinstate them.

The bank argued that a receiver was needed because the business remained in operation while failing to pay creditors and accruing arrears, Trucks and trailers were spread across the US and Mexico, and competing creditor actions were already underway.

Lion Force attempted to answer the receivership application with an NOI filed on May 13, followed the same day by an application to convert the proceeding into a CCAA case. The company sought a 10-day stay to demonstrate a viable restructuring path. Justice Myers noted that RBC was not stayed by the NOI because its enforcement rights had crystallized before the NOI filing, and that RBC did not learn of the NOI until it received Lion Force’s CCAA materials the day before the hearing.

The restructuring proposal was built around a sale of the Brampton head office, fewer trucks on the road, increased truck utilization from 86% to more than 90%, and cost reductions. Lion Force also argued that the Brampton property could be sold with leaseback optionality, allowing the trucking business to remain in place or relocate if a purchaser required possession.

The Court found the restructuring case too thin. TDB Restructuring, Lion Force’s proposed monitor, had only been retained for about a week after Lion Force lost its prior financial advisor due to a conflict, and Justice Myers said TDB had not had time to get up to speed. The cash flow forecast contemplated a $2 million DIP advance that would prime RBC, although Lion Force later submitted that it needed only $600,000 to $700,000 in the first 10 days.

Justice Myers also focused on proposed priority leakage. Lion Force sought approval of a DIP loan for $2 million, expected later to increase to $2.5 million, on less than 24 hours’ notice to affected secured creditors. It also sought broad authority to use DIP funds to pay pre-filing carrier arrears with monitor consent, without identifying the payees, setting a cap or explaining which creditors would be cut through the proposed right-sizing.

The Court concluded that the receivership should proceed. Justice Myers held that the debt and defaults were not in doubt, that Lion Force admitted insolvency in its CCAA application, and that the complexity of the assets and competing claims favoured a receivership. The CCAA application was dismissed.

Fuller Landau is the receiver, with authority to apply for Chapter 15 recognition if necessary. Counsel is Aird & Berlis for RBC, Miller Thomson and Cozen O’Connor for the companies, BLG for the receiver, Cassels for the proposed monitor, Blaney McMurtry for TD Equipment Finance, and Blakes for Ten Leasing.