V K Delivery & Moving Services Ltd. (Re)

2025 BCSC 1961 V K Delivery & Moving Services Ltd. (Re)

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: V K Delivery & Moving Services Ltd. (Re), 2025 BCSC 1961 Date: 20250909 Docket: S252336 Registry: Vancouver In the Matter of the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36, as Amended and In the Matter of the Business Corporations Act, S.B.C. 2002, c. 57, as Amended and In the Matter of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as Amended In the Matter of a Plan of Compromise and Arrangement of V K Delivery & Moving Services Ltd., Product Line Holdings and Logistics Ltd., VK 24/7 Logistics Solutions Ltd. and VK Linehaul Ltd. Petitioners - and - Docket: S251855 Registry: Vancouver Between: Royal Bank of Canada Petitioner And V K Delivery & Moving Services Ltd., VK Linehaul Ltd., Product Line Holdings and Logistics Ltd., and VK 24/7 Logistics Solutions Ltd. Respondents - and - Docket: S255836 Registry: Vancouver Between: Royal Bank of Canada Plaintiff And Ved Parkash Kaler and Gurdip Kaler Defendants Before: The Honourable Justice Basran Oral Reasons for Judgment Re: Application to Further Extend the Stay of Proceedings, Amend the Amended and Reinstated Initial Order, and Increase the Administration Charge In Chambers Counsel for V K Delivery & Moving Services Ltd., VK Linehaul Ltd., Product Line Holdings and Logistics Ltd., and VK 24/7 Logistics Solutions Ltd. and Ved Parkash Kaler: B. Martyniuk R. Eachambadi, Articled Student Counsel for Royal Bank of Canada: J. Reid Counsel for Crowe MacKay & Co. Ltd. D. Nugent Place and Date of Hearing: Vancouver, B.C. September 9, 2025 Place and Date of Judgment: Vancouver, B.C. September 9, 2025

TABLE OF CONTENTS Background.. 4 The BVD Approval Letter.. 6 The Third and Supplemental Reports of the Monitor.. 7 Issue #1: Should the Petitioners Be Given Until December 17, 2025 to Pay Down Its CRA debt?. 8 Issue #2: Should the Petitioners Application to Amend the ARIO to Provide for Full Repayment of Arrears to ICBC by November 30, 2025 Be Granted?. 8 Positions of the Parties. 8 Legal Principles. 9 Discussion and Disposition. 10 Issue #3: Increase of the Administration Charge. 12 [1] THE COURT: The petitioners, collectively referred to as the "VK Group", consist of V K Delivery & Moving Services Ltd., Product Line Holdings and Logistics Ltd., VK 24/7 Logistics Solutions Ltd., and VK Linehaul Ltd. (collectively, "the petitioners"). [2] In this application, the petitioners seek the following: a) an order extending the stay of proceedings imposed by the amended and restated initial order (the "ARIO") to December 17, 2025; b) an amendment to the ARIO in respect of the payment of arrears to the Insurance Corporation of British Columbia ("ICBC"); and c) an increase of the administration charge to $200,000 (the "Administration Charge"). Background [3] I described the background of this action in my ruling in respect of the ARIO dated May 27, 2025 (indexed as 2025 BCSC 1091) and in my oral reasons for judgment in respect of the further application to extend the stay of proceedings

on July 17, 2025 (indexed as 2025 BCSC 1415). [4] The petitioners are in the business of providing freight, delivery, storage, and logistic services in British Columbia, Alberta, Ontario, and the state of Washington. They employ over 100 employees and over 80 owner‑operator truck haulers. The combined revenue of the petitioners is over $40 million per year for the past three years. Recently, the VK Group earned $5.133 million in revenue from July 10 to August 27. [5] The petitioners have had cash flow difficulties. They owe approximately $7 million to Royal Bank of Canada ("RBC"), their principal secured creditor, and about $3.965 million to Canada Revenue Agency ("CRA"). This amount may be offset to some extent by a Goods and Services Tax credit, but that prospect is uncertain given the state of the companies' accounting records. [6] They also owe arrears to the ICBC for insurance of the companies' vehicles of approximately $150,000. This amount was expected to be entirely paid off by August 15, 2025, but ICBC agreed to defer and extend the payment of the arrears amount to November 30, 2025. [7] On May 16, 2025, this Court ordered the appointment of a monitor, Crowe MacKay & Company Ltd. (the "Monitor"), and a ten‑day stay in respect of proceedings against the petitioners pursuant to the Companies' Creditors Arrangement Act, R.S.C. 1985, c. C-36 [CCAA] (the "initial order").

At that time, RBC's application for the appointment of a receiver was adjourned. [8] On May 27, 2025, the petitioners sought an ARIO under the CCAA, extending the stay of proceedings until June 25, 2025, so that they could implement a restructuring plan. The Court granted this order and further adjourned RBC's application for the appointment of a receiver. [9] The stay was extended to July 17, 2025 and on that date, the petitioners applied for a further 60‑day extension of the stay to September 17, 2025. The Court extended the stay to today's date. At that time, the Court observed that if substantial progress towards repaying RBC and CRA has not occurred by today's date, it would further consider RBC's application for the appointment of a receiver. [10] In the time since the granting of the ARIO, the petitioners have, among other things, a) continued their operations in the ordinary course; b) cooperated with the court‑appointed Monitor by providing weekly cash flow statements and contributed to the preparation of the fifth cash‑flow statement; c) paid down ICBC prefiling arrears, and arranged to complete these payments by November 30, 2025; d) facilitated BVD Capital Corporation's ("BVD") due diligence of its operations; and e) received and agreed to a financing agreement from BVD for funding of $8.35 million, consisting of a factor facility and a demand loan of $3 million

(the "BVD Approval Letter"). [11] Yesterday, in discussions with counsel for CRA, counsel for the petitioners reached an agreement in principle with the CRA such that the CRA will accept the amount of $3,965,644 as the amount owing by the petitioners as of May 15, 2025. This consists of a deemed trust claim amount of $2,227,122 and an unsecured amount of $1,628,522. Furthermore, if a successful plan of arrangement is reached, the pre-CCAA claims of both the CRA and the petitioners will be released. [12] This is a potentially significant development because the CRA recently issued notices of assessment for corporate taxes of over $1.96 million to Product Line Holdings and Logistics Ltd, a member of the VK Group of companies. The BVD Approval Letter [13] The BVD Approval Letter includes several conditions that the VK Group must meet. These include the preparation of financial statements before the closing of the credit facility, no material adverse changes in the petitioners' business, ongoing reporting, recent appraisals to confirm the values of real estate security owned or controlled the principal of the VK Group, Ved Kaler. The Monitor is confidant that these conditions can be met. [14] Authorization from other lenders to register subordinate collateral mortgages will also be required. The Monitor is uncertain if this request will be met, but given that these are subordinate

positions, consent cannot unreasonably be withheld. [15] Section 9 of the BVD credit facility offer, dated June 3, 2025, requires: a) confirmation that a plan of arrangement has been developed and approved to emerge from CCAA filing; b) credit proceeds are to be used to pay CRA in full; c) the petitioners must continue to pay its rent, insurance, and other key creditors; and d) the petitioners provide online viewing access to its bank accounts. [16] The Monitor observes with respect to a) and b) with a plan of arrangement will likely only be available for presentation to creditors and the Court following the proposed fourth stay extension to December 17, 2025. [17] The financing from BVD will leave a funding deficit in relation to paying out RBC in full and the CRA's deemed trust claim. A substantial repayment of the CRA deemed trust amount owing is required to meet the BVD's conditions. [18] The fifth cash flow statement anticipates repayment of $1.12 million to CRA in respect of the deemed trust claimed between now and December 17, 2025. The Third and Supplemental Reports of the Monitor [19] The current approximate outstanding balances owed are $3.965 million to CRA and $7 million to RBC. [20] Based on an agreement with ICBC, the arrears amount owing to it will be fully repaid by November 30, 2025. [21] The Monitor is not aware of any material variances or any other matters

that may otherwise be considered materially adverse. The Monitor prepared a fourth cash flow forecast and notes no material variances or any matters considered to be material or adverse changes. [22] Nothing has come to the attention of the Monitor indicating that the interests of any creditor or stakeholder will be materially prejudiced by the granting of the third stay extension. [23] Based on the Monitor's review, it concludes that the petitioners' business will have sufficient liquidity to maintain operations during the proposed stay extension, and they, therefore, support the petitioners' application for stay extension to December 17, 2025. [24] A fifth cash flow statement extends projections to December 17, 2025, and again projects that the petitioners will not require additional funding to have sufficient liquidity to maintain their operations. It is projected that they will have approximately $1,173,534 cash on hand at the end of this period. Notably, no further arrears will be owing to ICBC, and this projection includes expected weekly payments to CRA of $80,000 commencing later this week, the week of September 11 to 17. [25] The Monitor reiterates that the VK Group is acting in good faith and with due diligence with respect to these proceedings. The Monitor is not aware of any material variances, nor is it aware of any matters that may otherwise be considered a

material adverse change, and it therefore supports the petitioners' application to extend the stay to December 17, 2025 in light of the receipt of the BVD Approval Letter. Issue #1: Should the Petitioners Be Given Until December 17, 2025 to Pay Down Its CRA debt? Issue #2: Should the Petitioners Application to Amend the ARIO to Provide for Full Repayment of Arrears to ICBC by November 30, 2025 Be Granted? Positions of the Parties [26] The petitioners seek an extension of the stay to provide them with the breathing room to continue operating, while meeting their ongoing obligations and paying down their debts to ICBC and CRA. [27] If the petitioners can satisfy BVD's conditions, the Monitor believes that they have the potential to file a viable plan of arrangement that would fully pay off RBC and the CRA deemed trust claim. The Monitor believes that this potential outcome could be substantially more favourable to stakeholders than the outcome of a receivership or bankruptcy and that further CCAA protection maximizes the prospects of a successful restructuring, preserves the petitioners' going concern value, and provides the greatest potential for all stakeholders with the possibility of CRA and RBC being fully repaid. [28] RBC, the petitioners' senior secured lender, is owed in excess of $7 million. It opposes the extension of the stay of proceedings and, instead, seeks the

appointment of a receiver. [29] RBC opposes a stay extension on the basis that the petitioners have made little progress towards improving their cash position and the BVD letter is not a viable financing option, is doomed to fail, and will not lead to a plan of arrangement that insures that it and CRA are fully repaid. RBC characterizes itself as a hostage lender, forced to fund fees of the other professionals involved in this matter. Legal Principles [30] I reiterate the relevant legal principles I have cited in my 2025 BCSC 1415 ruling on this matter: [21] The petitioners are eligible for CCAA protection because: a) they are Canadian incorporated companies and therefore fall within the CCAA definition of "company"; b) they are unable to meet their obligations as they become due and are therefore insolvent; and c) they have a total debt of over $5 million. [22] The court may grant a further extension of the stay if it is satisfied that: a) the petitioner has acted and is acting in good faith and with due diligence; and b) that circumstances exist that make a stay of proceedings appropriate. CCAA, ss. 11.02(2) and (3). [23] In considering if an extension of the stay period is appropriate, the court determines whether the extension advances for remedial purposes of the CCAA: Century Services Inc. v. Canada (Attorney General), 2010 SCC 60 at para. 70; Worldspan Marine Inc. (Re),

2011 BCSC 1758 at para. 12. [24] The appropriateness of the stay extension is assessed by considering if the order advances the policy objectives underlying the CCAA. The "chances for successful reorganization are enhanced when participants achieve common ground, and all stakeholders are treated advantageously and fairly, as circumstances permit". The purpose of the CCAA is to "facilitate the survival of going concerns" by "permitting the debtor to continue to carry on business and, where possible, avoid the social and economic costs of liquidating assets": Century Services Inc. at paras. 70 and 15. [25] Additionally, the purpose of the CCAA is to "facilitate the making of a compromise or arrangement between an insolvent debtor company and its creditors to the end that the company is able to continue in business": Chef Ready Foods Ltd. v. Hongkong Bank of Canada (1990), 51 B.C.L.R. (2d) 84 at para. 10 [Chef Ready]. [26] In CCAA proceedings, "the court is called upon to play a kind of supervisory role to preserve the status quo and to move the process along to the point where a compromise arrangement is approved or it is evident that the attempt is doomed to failure: Chef Ready at para. 10 [27] If it is too early to determine whether a debtor company will succeed in continuing its operations and it requires the protection of the court in order to do so, relief should be granted

under the CCAA: Long Potato Growers Ltd. (Re), 2008 NBQB 231 at paras. 43 and 65. Discussion and Disposition [31] The CCAA is remedial legislation intended to permit the stabilization of the petitioners' affairs and the negotiation of the plan of arrangement with creditors. [32] I must consider whether the petitioners have presented a plan to stabilize their affairs and usefully further their efforts to reorganize in a manner that demonstrates that they are acting in good faith and with due diligence. [33] Specifically, I must assess if the petitioners will be able to make significant payments to CRA over the next three months so as to be able to obtain the BVD financing. The petitioners are on a knife's edge because although their monthly revenue exceeds $3 million, their cash flow is less robust than anticipated. [34] In my view, the potential BVD financing is a viable plan and is not doomed to fail. The BVD financing is a potential funding option that will entirely pay out RBC and CRA. It is noteworthy that BVD completed its due diligence and its credit committee put forward the financing agreement, albeit with conditions, in the amount of $8.35 million. I also take note of the CRA's willingness to negotiate a deal with the petitioners as an indication that there is a potential way forward for the VK Group. [35] The Monitor's support of this stay extension is crucial. In its

third report, issued prior to the receipt of the BVD Approval Letter, it declined to support an extension of the stay in the absence and a firm financing agreement from BVD. This suggests that it is undertaking its role seriously, and with a view to assisting the court. [36] I recognize that the credit facility on offer by BVD will not entirely pay out RBC and CRA; however, part of the amount owing the CRA is not subject to a deemed trust. Accordingly, s. 63 of the CCAA may operate so as to provide the petitioners with up to six months to pay this amount as part of a plan of arrangement. [37] The petitioners have stabilized their operations by demonstrating positive cash flow while paying some of their debts, most notably to ICBC. BVD is a Canadian lender with experience in the trucking industry and has provided an $8.35 million financing agreement. [38] I am satisfied that the petitioners should be given a further extension to enable them to pay down the CRA debt to a sufficient extent to be able to obtain the BVD financing. [39] In my view, a further three‑month stay extension is in the interests of justice to permit the VK Group to continue operating, pay some of its debt to the CRA, and facilitate refinancing with BVD. The petitioners have demonstrated good faith in their dealings with the Monitor, CRA, ICBC, and other stakeholders. [40] As I noted in previous rulings, the

petitioners are longstanding companies with significant revenue and a large number of employees. I am not convinced the petitioners' attempts to find financing is doomed to fail because BVD has provided a conditional financing agreement that may result in full repayment to both RBC and CRA and will enable the petitioners to continue operating. [41] In my view, granting a stay extension supports the remedial purposes of the CCAA. I am granting an extension of the stay at just over three months to December 17, 2025, in order to facilitate the restructuring and ongoing operations of the petitioners' business. [42] If substantial progress towards repaying CRA has not occurred by December 17, 2025, I will reconsider RBC's application for the appointment of a receiver. [43] The application for a stay extension is granted to December 17, 2025. [44] The application to amend the ARIO to provide for full repayment of arrears to ICBC by November 30, 2025 is also granted. This is because extending the time to pay these arrears, as agreed by ICBC, will enable the petitioners to use its cash flow to make further payments to CRA. Issue #3: Increase of the Administration Charge [45] I turn next to the application for an increase to the administration charge from $100,000 in the ARIO in May 20, 2025 to $200,000. [46] Section 11.52 of the CCAA provides the authority to grant a charge in respect

of professional fees and disbursements. [47] I have considered the factors set out in Canwest Publishing Inc. (Re), 2010 ONSC 222 at para. 54: a) the size and complexity of the businesses being restructured; b) the proposed role of the beneficiaries of the charge; c) whether there is an unwarranted duplication of roles; d) whether the quantum of the proposed charge appears to be fair and reasonable; e) the position of the secured creditors likely to be affected by the charge; and f) the position of the Monitor. [48] In my view, a relatively modest increase in the administration charge is justified. I understand RBC's opposition to this charge based on the cash flow projections that anticipate $370,000 will be paid in professional fees from the petitioners' ongoing operations. However, circumstances may change and, in my view, an administration charge of $200,000 is entirely reasonable given the size and complexity of the VK Group of companies, the number of applications, and the length of these proceedings. I also note that the Monitor supports this increase. [49] The administration charge is increased to $200,000. [50] RBC's application for the appointment of a receiver is further adjourned to the next hearing date. "Basran J."