Kovo+ Holdings Inc. (TSXV: KOVO) has entered into a forbearance agreement with its senior secured lender, Avonlea Ventures #2 Inc. (AVI), providing the Calgary-based technology company with temporary relief from enforcement actions through April 1, 2027. The agreement follows a default notice issued by AVI on August 5, 2026, with aggregate indebtedness under the loan documents standing at approximately US$27,088,873 as at August 4, 2026. KOVO has also called a special shareholder meeting for October 5, 2026, to seek approval for the proposed restructuring transaction, which the board unanimously recommends.

Key Points

  • Kovo+ Holdings Inc. (TSXV: KOVO) announced a forbearance agreement with senior secured lender AVI on September 2, 2026
  • AVI will refrain from exercising enforcement rights — including appointing a receiver or commencing legal proceedings — through April 1, 2027, subject to conditions and milestones
  • Total indebtedness was approximately US$27,088,873 as at August 4, 2026, comprising principal of US$16,700,000, fees of US$5,996,749, and accrued interest of US$4,392,124
  • Investors should watch the October 5, 2026 special meeting vote, which requires two-thirds shareholder approval and a separate minority shareholder vote

Forbearance Structure and Three Staged Relief Periods

The Forbearance Agreement divides the relief period into three stages: through October 6, 2026; from October 7 through December 31, 2026; and from January 1 through April 1, 2027. During this time, KOVO will benefit from a 24-month payment holiday, with no required cash payments of principal, interest, fees, or expenses, though interest will continue to accrue. As consideration, KOVO has agreed to pay a forbearance fee of 3.0% of the indebtedness, which is only earned by AVI if a termination event occurs. AVI has also agreed to advance up to US$1.0 million to KOVO, of which US$150,000 has already been advanced.

Asset Sales and Debt Restructuring at the Core of the Proposed Transaction

The restructuring plan involves the sale of KOVO's revenue cycle management assets and its subsidiary AI Vector 2.0, Inc., with proceeds directed toward reducing the outstanding debt. AVI holds a right of first refusal over these assets and has provided a backstop offer of US$13 million in debt reduction. Following the asset dispositions, the remaining debt is to be restructured into a five-year loan at not less than 12% annual interest annually, with no payments required during the first two years. KOVO also expects to negotiate a development agreement with AVI, though the company notes there is no assurance this agreement will be finalised on satisfactory terms.

Special Meeting Thresholds and Related Party Disclosure

Because AVI is classified as a related party under Multilateral Instrument 61-101, the proposed transaction requires both a two-thirds supermajority vote of all shareholders and a separate majority approval from minority shareholders, excluding votes cast by AVI, HEAL Access USA Inc., and other interested parties. KOVO is relying on specific exemptions from the formal valuation requirement under MI 61-101. Proxies must be submitted by 10:00 a.m. Calgary time on October 1, 2026. The transaction also remains subject to TSX Venture Exchange acceptance to the extent required.