AdvEn: a priming interim facility, and the rival lender's appeal

2815793 Alberta Ltd. started out as the chief executive's company. Questioned on August 18, Ingo Mueller, chief executive officer of AdvEn Inc. and AdvEn Industries Inc., agreed that he had incorporated it and been its first and sole director and registered shareholder. The grid note that 281, as the parties call it, took from both companies on May 19, 2026 allows advances of up to US$900,000; its schedule records eight advances totalling US$552,445 by June 21, secured over all personal property of both companies, intellectual property included, per the Questioning of Ingo Mueller, Aug. 18, 2026, pp. 9, 20, 55. The security was registered on July 9 by the companies' own counsel, according to a letter from 281's counsel appended to the Proposal Trustee's First Report, Aug. 13, 2026, App. "G".

Mr. Mueller's affidavit describes the note as issued "in respect of advances from 281 Alberta Ltd.," per the Affidavit of Ingo Mueller, Aug. 8, 2026, para. 30(c). Cross-examined, he disputed that 281 had made them: "It wasn't the entity that provided that capital. It was the individual contributors who sent that money directly to the company," per the Questioning of Ingo Mueller, Aug. 18, 2026, p. 10.

By early August, 281 was negotiating to become the companies' interim lender. Mr. Mueller testified that when the last draft from 281's side left his issues unresolved, he asked Jacques Demers and Mohsen Khorassani whether they would "step in on the terms that we have consistently put forth for 281"; he believed both men had been 281's directors "at some point," per the Questioning of Ingo Mueller, Aug. 18, 2026, pp. 23, 37, 40, 56. 2841034 Alberta Ltd. was incorporated on August 5, 2026 and signed an interim financing agreement with both companies two days later, per the Proposal Trustee's First Report, Aug. 13, 2026, Apps. "E", "G". On August 19, Justice Dunlop of the Court of King's Bench of Alberta approved borrowing from it and ranked its charge, behind only an administration charge and a directors' charge, ahead of every other security interest, 281's among them, per the Order (SISP & Stay Extension), Aug. 19, 2026, paras. 13, 19–20. On August 26, 281 and Secure Property Development & Investment PLC, or SPDI, appealed, per the Civil Notice of Appeal, filed Aug. 26, 2026, item 4.

A carbon plant in Nisku

AdvEn Industries was founded in 2011 by Dr. Weixing Chen, who was looking for ways to improve carbon precursors and cut the waste of conventional carbon manufacturing. The group's patented ASAC process converts refinery residues into activated carbon for supercapacitors, filtration and healthcare uses with about one-tenth the energy of coconut-shell carbon, and its ESAC process makes electrodes for energy storage devices without solvents. The business is pre-revenue, with four full-time employees and about eight contractors at a leased plant of about 36,800 square feet in Nisku, and it has received $11,164,229 from three government funding programs and from SR&ED and Alberta innovation employment grant credits, per the Affidavit of Ingo Mueller, Aug. 8, 2026, paras. 9–12, 15, 20.

Both companies filed notices of intention to make a proposal under s. 50.4(1) of the Bankruptcy and Insolvency Act on July 20, 2026, with Alvarez & Marsal Canada Inc. as proposal trustee, per the Proposal Trustee's First Report, Aug. 13, 2026, para. 1. They attribute the filing to the cost of reaching commercial scale: approximately $6.5 million spent on the plant since March 2021, approximately US$8,000,000 more needed "to address fundamental deficiencies in the design and operation of the plant," and matured debt they could not raise the capital to retire. At June 30, 2026 they reported consolidated assets of $11,140,302 against liabilities of $29,303,079, and in early June they owed $650,856 in wage arrears, per the Affidavit of Ingo Mueller, Aug. 8, 2026, paras. 25, 37, 45. Approximately $10,512,720 is owed under 10% senior secured convertible notes from 2021 and 2022 whose holders Mr. Mueller believes never registered their security. SPDI holds 2025 notes with €500,000 of principal, approximately $837,273, and Excelsior Management Limited a £450,000 note, approximately $858,145, each secured on personal property other than intellectual property, per the Affidavit of Ingo Mueller, Aug. 8, 2026, paras. 30–31, 33–34. Subject to the trustee's review of the security, the companies say only 281 is secured against the intellectual property, per the Bench Brief of the Applicants, Aug. 19, 2026, para. 30.

Three agreements for one facility

The August 7 agreement provides up to US$650,000 at 8%, repayable October 31, 2026, and requires the borrowers to "seek an order" giving the lender priority security, per the Proposal Trustee's First Report, Aug. 13, 2026, App. "E", ss. 1–3, 6. Mr. Mueller swore that the lender "represents the only realistic source of financing available to the Applicants at this time," per the Affidavit of Ingo Mueller, Aug. 8, 2026, para. 63. Cross-examined, he agreed that the agreement's borrowing schedule was blank, that 2841034 Alberta Ltd. had lent the companies nothing and that there was no history of loans between them, and said he could not speak to whether anything in the agreement obligated the lender to advance funds, per the Questioning of Ingo Mueller, Aug. 18, 2026, pp. 23–24, 26.

Alvarez & Marsal Canada Inc., the proposal trustee, supported the facility. Without it the companies would run out of cash by the final week of August, and a bankruptcy "could result in little to no recoveries to creditors due to the highly specialized nature of the Companies' manufacturing assets," per the Proposal Trustee's First Report, Aug. 13, 2026, paras. 43(c), (f). The trustee understood the lender's funding sources to be affiliated with existing secured creditors, reasoned that certain major stakeholders "would not be providing the Interim Financing Facility if they did not have confidence in Management," and wrote that the facility "does not appear to unduly prejudice any other creditors," while noting it had been copied that day on an objection from "another group of secured creditors," per the Proposal Trustee's First Report, Aug. 13, 2026, paras. 43(e), (g).

The objection came from Blue Rock Law LLP, for SPDI and for 281, which the letter calls "the DIP LenderCo." It opposed the application "in whole." 281 had "lost confidence in the management of the Applicants," the letter said, and the financing was not at arm's length: 2841034 Alberta Ltd.'s only directors were Mr. Khorassani and Mr. Demers, "each of whom was then a director" of 281, and its registered office and agent for service were those recorded on 281's incorporation, per the Proposal Trustee's First Report, Aug. 13, 2026, App. "G".

On August 17 the firm put an alternative to the trustee: US$800,000 from 281 at 7.5%, maturing November 30, 2026, with US$550,000 already in its trust account, a US$50,000 wire en route and a signed commitment letter for the remaining US$200,000, each advance subject to the trustee's confirmation against the filed cash-flow statement. 281's willingness to lend was "conditional on its having input into a revised SISP," and the letter asked for an adjournment of seven to ten days, citing "unresolved disputes" with the new lender's directors over its incorporation, per the Affidavit of Amanda Urban, Aug. 17, 2026, Ex. "A". The companies' bench brief answered that the offer's "slightly more favourable terms" came with an "enhanced SISP" left undefined, and that SPDI and 281 "have not filed any responding evidence," per the Bench Brief of the Applicants, Aug. 19, 2026, paras. 28, 32.

At the questioning on August 18, taken by video with Mr. Mueller in Germany, he said he was "getting nothing from this financing," then described an agreement with the company under which, should one of the companies be the successor, "as part of my CEO remuneration in lieu of my total package I would receive a combination of 15 percent in equity of the successor company based upon certain bonus milestones, KPIs," per the Questioning of Ingo Mueller, Aug. 18, 2026, pp. 45–47. The companies' counsel refused as irrelevant a question whether any shareholder or director of the lender had agreed to procure him an interest in a restructured business, and took five of six undertakings under advisement, among them production of "the plan post RVO," per the Questioning of Ingo Mueller, Aug. 18, 2026, pp. 42, 63–64.

On the day of the hearing the lender's side produced two affidavits. Mr. Demers, a director of both the lender and Excelsior, swore that both "have confidence in the management of the Companies" and exhibited an amended agreement dated August 19 that keeps 8% and October 31 and adds a sentence: "The Lender shall be obligated to fund the Principal Sum in such amounts as requested by the Borrower in writing in the Borrower's sole discretion." Its signing record shows completion at 16:02 UTC, per the Affidavit of Jacques Demers, Aug. 19, 2026, paras. 1–3, Ex. "A". A legal assistant at the lender's counsel swore to "an amended amended interim funding agreement," also dated August 19, at 6.5% and repayable December 31, 2026, completed at 19:34 UTC, or 1:34 p.m. in Calgary, per the Affidavit of Kary Heikoop, Aug. 19, 2026, para. 2, Ex. "A". The application had been set down for 3:00 p.m., per the Application, filed Aug. 11, 2026, p. 1.

What the order does

The order, entered August 21, extends the time to file a proposal to October 3, 2026, procedurally consolidates the two estates, and grants a $500,000 administration charge and a $100,000 directors' and officers' charge. It authorizes borrowing of up to US$650,000 under "the interim financing agreement dated August 19, 2026," a date both amended versions bear, and ranks the three charges ahead of all other security, per the Order (SISP & Stay Extension), Aug. 19, 2026, paras. 2, 9–13, 19–20. The draft order served with the application had named the agreement of August 7, per the Application, filed Aug. 11, 2026, Sch. "A", para. 13.

Under the sale and investment solicitation process the order approves, which began August 21, Phase I bids are due September 25 and Phase II bids October 9, with an approval hearing in the week of November 2 and an outside closing date of November 30. If the interim lender elects to bid, it loses access to information about other bids, its Phase I bid must be binding, and any bid it submits "shall be deemed to constitute a Qualified Bid notwithstanding the requirements set forth in this SISP." No bidder may discuss the opportunity with the companies' creditors, contract counterparties, directors or employees without the trustee's agreement, per the Order (SISP & Stay Extension), Aug. 19, 2026, Sch. "A", paras. 8, 13, 18, 40. The trustee acknowledged that a second phase would run past the facility's proposed October 31 maturity and said it expected to discuss an extension with the lender if required, per the Proposal Trustee's First Report, Aug. 13, 2026, para. 74.

The appeal

The civil notice of appeal, filed in the Court of Appeal of Alberta by David W. Mann, KC and Scott Chimuk of Blue Rock Law LLP, challenges paragraphs 1 and 10 to 26 of the order, covering service, the charges and their priority, and the SISP, and leaves the extension standing. The appellants say no permission is needed under s. 193(c) of the BIA, the property involved exceeding $10,000 in value, or alternatively s. 193(a), and that if it is, the notice doubles as their application for leave under s. 193(e). Reasons were delivered orally, and a transcript has been ordered. The notice says Justice Dunlop refused the appellants an adjournment of seven to ten days to file responding evidence, per the Civil Notice of Appeal, filed Aug. 26, 2026, items 1, 3–4, 6.

The grounds, as stated, begin with the hearing itself. The approved agreement, the notice says, was not the one identified in the application, was first placed in evidence by two affidavits sworn that day, and came in "two inconsistent versions bearing the same date," while AdvEn had "on the morning of the hearing refused to answer undertakings" going to the lender's provenance and Mr. Mueller's personal interest. The judge, the appellants say, approved a super-priority charge for a lender "incorporated on August 5, 2026, fourteen days before the hearing," without considering its independence, the chief executive's 15% equity interest, absent from AdvEn's affidavit evidence, or 281's executed alternative "for a greater amount on terms AdvEn acknowledged to be more favourable, with funds in trust," per the Civil Notice of Appeal, filed Aug. 26, 2026, items 6(a)–(b).

They also say the court found, or proceeded as though, no creditor would be materially prejudiced under s. 50.6(5)(f) without evidence of the realizable value of their collateral, and took the willingness of the lender's own principals to lend as the confidence of major creditors under s. 50.6(5)(c), when SPDI and 281, "being AdvEn's senior registered secured creditors and the only creditors to address the Court," had said they had lost it. They call the SISP's no-contact clause "a material overreach," object to the lender's deemed Qualified Bid, and say the administration and D&O charges were sized without regard to a cash-flow statement "in which professional fees are the largest single disbursement," per the Civil Notice of Appeal, filed Aug. 26, 2026, items 6(c)–(f).

They ask that those paragraphs be set aside, or the application reheard on a full record, with a declaration that s. 195 of the BIA stays proceedings under them until the appeal is decided; pointing to the September 25 bid deadline, they intend to seek an expedited hearing, per the Civil Notice of Appeal, filed Aug. 26, 2026, items 7, 10. Nothing filed after the notice of appeal is in the record read for this piece: no ruling on permission or the stay, and no hearing date.