The Supreme Court of Nova Scotia has approved modified financing for HealthHub Patient Engagement Solutions Inc., a company that supplies televisions and electronic tablets to patients in approximately 180 hospitals across Canada. The decision in HealthHub Patient Engagement Solutions Inc. (Re), 2025 NSSC 261 (CanLII) was released August 5, 2025, and it came after the court rejected some of the original terms proposed for debtor-in-possession (DIP) financing and declined to grant an administrative charge due to notice concerns.
When a company is in serious financial trouble but still operating, it can ask the court for permission to take out a special type of loan called debtor-in-possession (DIP) financing. This money is meant to keep the business running during a court-supervised restructuring, such as paying employees, suppliers, and other critical costs.
DIP loans are different from normal loans because the lender gets paid back before most other creditors, even if the business fails. This “super-priority” status makes lenders more willing to loan money to a struggling company.
In HealthHub’s case, the proposed DIP loan came with an unusual condition: the company could only sell its business to the lender providing the DIP financing, and could not look for other buyers. The court removed that condition, saying it could prevent fair competition and potentially reduce the value of the business if other interested buyers never got a chance to make an offer.
HealthHub filed a Notice of Intention to Make a Proposal on June 28, 2025, after running out of cash. Without immediate funding, the company’s hospital entertainment systems would have gone dark, cutting off patient access to television, online services, and hospital food ordering. The company’s principal creditor, the Toronto-Dominion Bank, had recently sold its debt to 1001285202 Ontario Inc., a firm connected to HealthHub’s second-largest creditor and internet service provider, Rally Enterprises & Communications Corporation.
The court considered applications to extend HealthHub’s time to file a proposal and to approve DIP financing. Registrar Raffi A. Balmanoukian granted the time extension but refused to approve the DIP financing as initially drafted because it contained exclusivity clauses that would have required HealthHub to sell its business only to the DIP lender, without testing the market. The registrar expressed concern that such restrictions could “pre-chill” the marketplace and prevent other potential buyers from coming forward.
Following discussions, counsel agreed to remove the exclusivity provisions and add language requiring the proposal trustee to make reasonable efforts to evaluate any future transaction, including obtaining valuations and seeking market data. With those changes, the court approved the DIP financing, which will provide short-term funding at prime plus 3 percent interest and a $25,000 commitment fee.
The registrar also declined to grant a $200,000 administrative charge after finding that certain public creditors, including the Canada Revenue Agency, had not received notice of the application. He emphasized that DIP charges and administrative charges are separate remedies under different provisions of the Bankruptcy and Insolvency Act, serving different stakeholders.
The decision addressed several procedural issues, including the proper filing of insolvency applications in Nova Scotia, the court’s default expectation for in-person attendance by counsel, and the limited circumstances in which sealing orders will be granted. Balmanoukian stressed that applications should be filed in the correct forum, clearly set out the relief sought, be properly served on affected parties, and follow local court protocols.
HealthHub owes about $34 million, and its financial condition was described as urgent, with only $30,000 on hand and substantial ongoing expenses. The 45-day extension granted under section 50.4(9) of the Bankruptcy and Insolvency Act will give the company more time to explore restructuring options, which could include a reverse vesting order, a straight sale, or a formal proposal to creditors.
The case remains ongoing, with further proceedings expected as HealthHub and its proposal trustee evaluate potential transactions to keep the company operating and its hospital-based systems in service.
