Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
Issue link: https://digital.carswellmedia.com/i/1541334
36 www.lexpert.ca Top 10 Business Decisions MICHALOWSKI (TRUSTEE) V. GOLD FLORA CORPORATION, 2025 BCSC 1554 THE DISPUTE arose from the 2023 merger between TPCO Holding Corp., a publicly traded cannabis company, and privately held Gold Flora LLC. In Michalowski (Trustee) v. Gold Flora Cor poration, the Supreme Court of British Columbia established important guidance for determining fair value in shareholder dissent cases involving merger transactions. Justice V. Jackson ruled that minority shareholders dissenting from the merger were enti- tled to US$0.9847 per share – the value negotiated and publicly stated by the parties – rather than the US$0.17 trading price advocated by the company. Eleven petitioners challenged Gold Flora Corporation's position that their shares should be valued at TPCO's June 15, 2023, trading price. Justice Jackson sided with the dissenters, finding that the stated share value emerged from arm's-length negotia- tions between informed parties following TPCO's extensive strategic process focused on share-value maximization. The court found that TPCO's signifi- cant cash reserves and status as a publicly traded company represented value not recognized in its trading price but inherent in its en bloc value. The court rejected arguments that the negotiated share value was merely an "implied" figure, finding this inconsistent with contemporaneous evidence, including fairness opinions from Hyperion Capital Inc. and INFOR Financial Inc., securities filings, and the parties' negotiations. Critical to the deci- sion was evidence that TPCO's shares were not trading in an efficient market. "The decision shows that there is hope for dissenters," said Rahool Agarwal of Lax O'Sullivan Lisus Gottlieb LLP. "The court accepted that the share price negotiated by the parties and disclosed to the market was a strong indication of fair value, even in the face of a significantly lower trading price, and even in a merger transaction where shares were exchanged and not bought and sold. The company was not permitted to reinvent their position on value to get a • Julian Michalowski as trustee of Julian Michalowski TR Julian Michalowski 2020 Revocable Trust Dated 12/1/2020, Cameron Gharabiklou, Jason Victor Lam, Corrine Perez Steiger, Big Horse LLC, Malante Hayworth, Treasure Dragon Holdings Ltd., Sandra Elizabeth Wertelet, Kevin McGrath, Joshua Ginsberg, Andoni Garcia, and Myles Peck > Lax O'Sullivan Lisus Gottlieb LLP and Kornfeld LLP> Rahool Agarwal, Tyler Morrison and Abbas Sabur • Gold Flora Corporation (formerly TPCO Holding Corp.) > Dentons Canada LLP > Matthew Fleming and Samantha Chang CLIENTS > FIRMS > LAWYERS better outcome in the litigation. The decision also provides valuable guidance for parties engaging in court-approved M&A transac- tions with respect to how deals should be structured and how the deal price should be framed and communicated to the market." The court noted that this was a first-instance case involving dissent proceedings in a merger context rather than a traditional share purchase transac- tion, making it a matter of general interest beyond the parties involved.