TD obtains initial CCAA order for Saskatchewan auto dealers

Paragon Sales Ltd., Langenburg Motors (1967) Ltd., and 616001 Saskatchewan Ltd., which operate two motor vehicle dealerships in Langenburg, Saskatchewan, obtained an Initial Order under the Companies’ Creditors Arrangement Act on February 20, 2026, on application by The Toronto-Dominion Bank, owed over $18 million.

Paragon and Langenburg operate motor vehicle dealerships from land and improvements owned by Paragon. The Schapperts are the directors and officers and, except for Langenburg Motors, the companies’ only shareholders.

TD is the companies’ secured lender under an Automotive Lending Agreement, as amended April 28, 2025, pursuant to which it provided a demand floor plan facility of $18 million to finance vehicle purchases.

In 2023, the Schapperts engaged a broker to sell their shares. In April 2024, they entered into an agreement with Raymond Lewis under which Mr. Lewis acquired a 25% interest in Langenburg Motors, became general manager of both dealerships, and assumed the role of chief executive officer. The transaction later deteriorated. In July 2025, the Schapperts terminated the agreement, accused Mr. Lewis of bad faith and fraud, and took steps to regain control.

The companies commenced litigation against Mr. Lewis and related entities, alleging improper retention of 46 vehicles, all of which were subject to TD’s security. TD conducted an audit and determined that a significant number of vehicles had been sold out of trust, meaning sale proceeds were not remitted in accordance with the loan agreement. TD issued demands and section 244 notices and commenced its own enforcement proceedings, obtaining a December 5, 2025 order requiring turnover of vehicles in Mr. Lewis’s possession.

A forbearance agreement dated November 6, 2025 was executed while TD pursued enforcement. As part of that arrangement, GlassRatner was retained as TD’s business advisor.

Following the Lewis dispute, the companies experienced escalating financial pressure. Total outstanding tax obligations rose to nearly $900,000, with Saskatchewan Finance actively pursuing unpaid PST. The companies have been unable to pay vendors in the ordinary course and, despite workforce reductions, liquidity remained constrained. In early January 2026, cash flow analysis revealed a negative permanent variance exceeding 10%.

The companies, in consultation with TD, have been exploring a potential sale of the business and property since on or about September 2025. A prospective purchaser expressed interest, but attention shifted to stabilizing operations amid liquidity challenges.

The Initial Order grants a stay of proceedings until March 2, 2026, subject to extension. The companies are authorized to continue operations while the Monitor pursues a SISP and continues negotiations with a potential stalking horse bidder.

GlassRatner Restructuring was appointed Monitor with enhanced powers. Counsel is McDougall Gauley for TD, MLT Aikins for the companies and Dentons for the Monitor.