ThoughtWire launches sale process after customer loss and liquidity crunch

ThoughtWire Corp. filed a notice of intention to make a proposal on August 7, 2026, after customer losses, high operating costs and historical liabilities left the Toronto-based software company unable to service its secured debt. On September 2, Justice Cavanagh extended the company’s proposal deadline to October 20 and approved a four-week sale and investment solicitation process backed by a stalking horse bid from 1426994 Ontario Inc., a company formed by secured creditors Josip Kozar and Hole Medical Inc. 

ThoughtWire develops AI-powered digital twin software that creates virtual models of real-world systems to provide operational intelligence, workflow automation and predictive decision support, with medical service providers forming its principal customer base. Its platforms have been used in smart hospitals and buildings and depend on 13 cloud-service subscriptions. The company wholly owns ThoughtWire IP Corp., which holds its intellectual property, and ThoughtWire Corp USA, a Delaware subsidiary responsible for US operations, although neither subsidiary is presently active. ThoughtWire historically employed approximately 40 full-time employees, falling to approximately 19 by late 2025. Almost all remaining employees had been terminated by March 2026, leaving three former full-time employees working as contractors when the NOI was filed. The company’s assets are primarily composed of intellectual property.

The company’s financial problems date back to the COVID-19 pandemic, which impaired its ability to secure new contracts. Those pressures were compounded by approximately $41.5 million of senior loans, $15.9 million of subordinated debentures and mounting legal and collection pressures. ThoughtWire undertook an informal restructuring in 2024 that brought in new funding from Kozar, subordinated various loans and converted most existing debt to equity, but the business continued to carry an oversized workforce and struggled to secure new contracts. Its liquidity deteriorated further in November 2025 when unpaid amounts owing to Microsoft resulted in the interruption of services on which ThoughtWire relied to operate. The disruption contributed to the loss of a key customer in late 2025 and early 2026.

By the NOI filing, ThoughtWire owed approximately $435,000 to Kozar and $376,500 to Hole under secured loans. It also faced approximately $2.2 million of unsecured claims, primarily from trade creditors and former employees, at least $51,248 in unpaid employee source deductions and Ministry of Finance registrations arising from employee-related obligations. The company accumulated approximately $455,000 of unpaid wages and vacation pay during 2025 and early 2026, with 11 former employees pursuing claims through the Ministry of Labour. A July 2026 registration brought the Ministry claim to approximately $698,518, although the relative priority of portions of that claim against the private secured debt remained under review. The company’s motion materials put its overall liabilities at approximately $3.7 million following the earlier restructuring.

The restructuring is centred on a SISP administered by Dodick Landau, the proposal trustee. The stalking horse bidder has taken assignments of the Kozar and Hole secured claims and proposes to acquire ThoughtWire through a reverse vesting transaction. The bid consists of a credit bid of approximately $783,000 of secured debt, a credit bid for amounts outstanding under the court-approved DIP facility provided by the stalking horse bidder, estimated at $255,000 at closing, and sufficient cash to satisfy claims ranking ahead of the secured debt, unpaid professional costs and the costs of administering and winding down a residual company. The structure is intended to preserve ThoughtWire’s SOC 2 compliance and vendor-of-record status with Supply Ontario, which the company says cannot be transferred, while also preserving more than $4 million of tax loss carryforwards. Existing shares would be cancelled and the stalking horse bidder would own 100% of the restructured company.

The SISP began September 7, with bids due October 6 and an auction, if required, scheduled for October 8. A sale approval hearing was targeted for October 20, subject to Court availability, with closing targeted for October 30.

Dodick Landau is the proposal trustee. Counsel is Loopstra Nixon for ThoughtWire and Miller Thomson for the proposal trustee.