Product safety firm Labtest lands in receivership after missed payments

Labtest Certification Inc., Labtest Certification Ontario Inc., 2842878 Ontario Inc. and Goshu Products/Services Inc. were placed into receivership on September 15, 2026, on application by National Bank of Canada, which was owed approximately $17.6 million. Justice G.C. Weatherill of the Supreme Court of British Columbia appointed Deloitte Restructuring Inc. as receiver over the companies' assets, undertakings and property. The Court also granted National Bank judgment for $17,621,821.65 against each of the four companies, as well as guarantors Kavinder Singh Dhillon and MuAnalysis Inc.

Labtest and Labtest Ontario provide product safety testing, inspection and certification services to manufacturers and sellers of medical, electrical, chemical and other products subject to Canadian and international standards. Goshu and 284 Ontario are real estate holding companies. Goshu owns properties in Delta and Richmond, British Columbia, while 284 Ontario owns 2520 and 2528 Bristol Circle in Oakville, Ontario. The group's headquarters are in Delta, and Dhillon is its chairman, president and CEO.

National Bank's financing included a $500,000 demand operating loan and credit-card facilities for Labtest, a $100,000 demand operating loan and credit-card facility for Labtest Ontario, a $7.5 million demand collateral mortgage loan to Goshu and a $9.8 million demand collateral mortgage loan to 284 Ontario. The Goshu financing was used to repay financing and amounts owing to the Canada Revenue Agency, while the 284 Ontario facility was used to repay financing and buy out other shareholders. The loans, other than Labtest's US credit-card facility, were subject to a cross-default agreement. As of June 26, 2026, $17,621,821.65 remained owing to National Bank. 

The relationship began deteriorating in 2025. National Bank said the companies had been in default since at least September 2025 and temporarily waived certain reporting, financial covenant and other defaults that month. Goshu subsequently missed monthly loan payments in November and December 2025, January 2026, and April through June 2026. The bank also cited failures to satisfy a required debt-service ratio, provide financial statements and projections, comply with restrictions on payments and asset dispositions, and keep taxes and other potential priority claims current.

By February 2026, National Bank was seeking additional information about the group's financial position and later discovered material unpaid income tax, GST/HST, payroll source deductions and property taxes. The Bank engaged Deloitte as financial adviser on April 13 to review and monitor the business and its assets. According to the petition, the companies did not provide all requested documents, and information that was produced was repeatedly incomplete or contained errors. National Bank also learned in May that the group was using accounts at Royal Bank of Canada and Wells Fargo, rather than maintaining its primary banking relationship with National Bank.

The financial pressure became clearer later that month when National Bank learned that a CRA payroll audit had identified approximately $700,000 of British Columbia payroll arrears and $240,000 of Ontario payroll arrears. National Bank formally demanded repayment on June 2, requiring all outstanding indebtedness to be paid by June 23. The companies did not repay the debt by that deadline. They deposited enough money on June 26 to cure earlier Goshu payment defaults, but did not cure the June payment default, and the loans remained nearly fully drawn.

National Bank also raised concerns about the reliability of the group's accounting records and its ability to complete a sale outside a court-supervised process. It said the companies had provided repeated assurances about a potential third-party sale without sufficient supporting documentation. Deloitte's testing found that none of the sampled bank transactions provided by the companies were linked to journal entries, while the group's January 2026 migration to Salesforce omitted details supporting its 2025 balance sheet and required balances to be reconstructed manually. The business also operated on a cash basis without formal month-end closings, according to the petition.

Deloitte took possession and control of the assets on September 16. Its September 24 notice reports estimated assets of approximately $23.9 million, including approximately $13.6 million of land and buildings, $6.1 million of net fixed assets, $1.8 million of accounts receivable and $735,000 of accreditations and intellectual property. The values are not liquidation appraisals: the real estate amounts are based on property-tax assessments, while several other categories are drawn from the debtors' records.

The receiver reported approximately $20.1 million of known creditor claims, including National Bank's approximately $17.6 million secured claim, approximately $1.3 million owing to the CRA, $175,000 of property taxes and approximately $1 million owing to unsecured creditors. The CRA figures remain subject to change because not all filings were current when the receiver prepared its notice.

Deloitte intends to monetize the companies' property to maximize creditor recoveries, including through a going-concern sale process for Labtest, Labtest Ontario and relevant related entities.

Counsel includes Blake, Cassels & Graydon for National Bank, DLA Piper for the receiver, and Arora Zbar and Richard Buell Sutton for Labtest et al.