Acerus Pharmaceuticals Corporation

Headnote

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications and National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions -- application for order that issuer is not a reporting issuer and for full revocation of failure-to-file cease trade order -- issuer cease traded due to failure to file annual audited financial statements and annual management's discussion and analysis and related certifications -- issuer has completed reorganization under the Companies' Creditors Arrangement Act -- issuer has applied for a full revocation of the cease trade order -- issuer has applied to cease to be a reporting issuer in each jurisdiction where it is a reporting issuer -- full revocation of the failure-to-file cease trade order and cease to be reporting issuer application granted.

Applicable Legislative Provisions

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 1(10)(a)(ii) and 144.

National Policy 11-206 Process for Cease to be a Reporting Issuer Applications.

National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions.

IN THE MATTER OF THE SECURITIES LEGISLATION OF ONTARIO AND IN THE MATTER OF A REVOCATION OF A FAILURE-TO-FILE CEASE TRADE ORDER AND THE PROCESS FOR CEASE TO BE A REPORTING ISSUER APPLICATIONS AND IN THE MATTER OF ACERUS PHARMACEUTICALS CORPORATION (the issuer)

Background

1. The Issuer is subject to a failure-to-file cease trade order (the FFCTO) issued by the Ontario Securities Commission (the Principal Regulator) on April 6, 2023.

2. The Issuer has applied to the Principal Regulator under National Policy 11-207 Failure-to-File Cease Trade Orders and Revocations in Multiple Jurisdictions (NP 11-207) for a revocation of the FFCTO (FFCTO Revocation Order) pursuant to section 144 of the Securities Act (Ontario) (the Legislation).

3. The Principal Regulator also received an application from the Issuer for an order (the Cease to be a Reporting Issuer Order) under section 1(10)(a)(ii) of the Legislation that the Issuer has ceased to be a reporting issuer in all jurisdictions of Canada in which it is a reporting issuer pursuant to section 21 of National Policy 11-206 Process for Cease to be a Reporting Issuer Applications (NP 11-206).

4. Under the Process for Cease to be a Reporting Issuer Application (for a passport application):

(a) The Principal Regulator is the principal regulator for the application; and

(b) The Issuer has provided notice that subsection 4C.5(1) of Multilateral Instrument 11-102 Passport System (MI 11-102) is intended to be relied upon in Alberta, British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador.

Interpretation

5. Terms defined in National Instrument 14-101 Definitions, NP 11-206, NP 11-207 and MI 11-102 have the same meaning if used in this order, unless otherwise defined.

Representations

6. This decision is based on the following facts represented by the Issuer:

(a) The Issuer is a "reporting issuer" in the provinces of Ontario, Alberta, British Columbia, Saskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador (the Reporting Jurisdictions).

(b) The Issuer was incorporated under the Business Corporations Act (Ontario) on July 15, 2009 as J5 Acquisition Corp. In July 2011, the Issuer completed a qualifying transaction and renamed itself Trimel Pharmaceuticals Corporation and its shares were de-listed from the TSX Venture Exchange and relisted for trading on the Toronto Stock Exchange (the "TSX"). In September 2015, the name of the Issuer was changed to Acerus Pharmaceuticals Corporation.

(c) The Issuer's registered and head office is located at 7025 Langer Drive, Suite 205, Mississauga, Ontario.

(d) In light of ongoing financial difficulties, the Issuer and its subsidiaries (the Acerus Group) filed for creditor protection under the Companies' Creditors Arrangement Act (CCAA) and received an order (the Initial Order) for creditor protection under the CCAA from the Ontario Superior Court of Justice (Commercial List) (the Court) on January 26, 2023 (the CCAA Proceedings).

(e) Pursuant to the Initial Order, the Court, inter alia, appointed Ernst & Young Inc. as monitor (in such capacity, the Monitor) of the Acerus Group under the CCAA Proceedings and authorized the Issuer to obtain an interim debtor-in-possession loan from First Generation Capital Inc. (First Generation) in order to fund the CCAA Proceedings and for other short-term working capital requirements of the Issuer (the DIP Loan).

(f) On March 9, 2023, the Court granted an order (the SISP Order) authorizing the Monitor to conduct, with the assistance of the Acerus Group, a sale and investment solicitation process (the SISP) intended to solicit interest in the opportunity for a sale of or investment in all or part of the Acerus Group's assets and business operations.

(g) On May 25, 2023, the Issuer announced that a bid by First Generation had been designated as the successful bid under the SISP (the Successful Bid) and that in accordance with the SISP Order the Issuer would seek Court approval of the Successful Bid and authority to consummate the transactions provided for therein at an approval hearing to be held on May 30, 2023.

(h) On May 30, 2023, the Court granted an order under the CCAA (the Sale Approval and Vesting Order) pursuant to which, inter alia, (i) the Court vested certain excluded assets and excluded liabilities in "Residual Co. 1" and "Residual Co. 2" and (ii) the Court authorized the completion of a reorganization transaction (the Transaction) partially comprised of the following steps:

(i) the Issuer would issue to First Generation 1,000,000,000,000,000 Class "A" common shares (the Class A Common Shares and such Class A Common Shares subscribed for by First Generation being the Purchased Shares) to be paid by the forgiveness by First Generation of certain secured loan agreements of the Acerus Group owing to First Generation and the DIP Loan; and

(ii) pursuant to articles of reorganization of the Issuer, all equity interests of the Issuer outstanding prior to the issuance of the Purchased Shares, including those common shares then existing (the Common Shares), would be deemed terminated and cancelled without consideration and the only equity interests of the Issuer that would remain outstanding would be the Purchased Shares such that First Generation would become the sole shareholder of the Issuer.

(i) Pursuant to the Sale Approval and Vesting Order, having been advised of the provisions of Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions relating to the requirement for "minority" shareholder approval in certain circumstances, the Court ordered that no meeting of shareholders or other holders of equity interests of the Acerus Group was required to be held in respect of the Transaction.

(j) On June 28, 2023, the Issuer received a partial revocation order from the OSC to enable the Issuer to complete the Transaction.

(k) The Transaction was completed on July 10, 2023. On July 10, 2023, the Issuer disseminated a news release announcing the completion of the Transaction and filed such news release as well as a material change report on the Issuer's profile on the System for Electronic Document Analysis and Retrieval.

(l) The Common Shares were previously listed on the TSX under the symbol "ASP". The Common Shares were delisted from the TSX effective as of the close of markets on March 3, 2023 as a result of the failure of the Issuer to meet the continued listing requirements of the TSX.

(m) The Common Shares were also previously quoted for trading on the OTC Pink in the United States under the symbol "ASPCF". Such shares are cancelled pursuant to the Sale Approval and Vesting Order.

(n) As a result of the completion of the Transaction, the only outstanding securities of the Issuer are the Purchased Shares held by First Generation. The Issuer has no other outstanding securities (including debt securities).

(o) The Issuer has no current intention to seek public financing by way of an offering of securities in Canada or elsewhere or to make or maintain a market in securities of the Issuer.

(p) The securities of the Issuer are subject to a FFCTO issued by the Principal Regulator on April 6, 2023 that is applicable in the Reporting Jurisdictions for its failure to file, subsequent to the date of the Initial Order and the appointment of the Monitor, Filings (as defined below) under applicable securities laws.

(q) The Issuer is applying for an order revoking the FFCTO and an order that the Issuer has ceased to be a reporting issuer in the Reporting Jurisdictions.

(r) As of the date hereof, the Issuer is not in default of any of the requirements of applicable Canadian securities laws except the obligation to file the following continuous disclosure documents (the Filings):

(i) audited annual financial statements for the year ended December 31, 2022, management's discussion and analysis relating to the audit annual financial statements for the year ended December 31, 2022, annual information form for the year ended December 31, 2022, and certification of the foregoing filings as required by National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings (NI 52-109);

(ii) interim financial statements for the three month period ended March 31, 2023, management's discussion and analysis relating to the interim financial statements for the three month period ended March 31, 2023 and certification of the foregoing filings as required by NI 52-109;

all of which Filings became due after the appointment of the Monitor (collectively, the Unfiled Disclosure).

(s) But for the Unfiled Disclosure, the Issuer would be eligible to use the "simplified procedure" under NP 11-206 on the basis that:

(i) the Issuer is not an OTC reporting issuer under Multilateral Instrument 51-105 Issuers Quoted in the U.S. Over-the-Counter Markets;

(ii) the outstanding securities of the Issuer, including debt securities, are beneficially owned, directly or indirectly, by fewer than 15 security holders in each of the jurisdictions of Canada and fewer than 51 security holders in total worldwide; and

(iii) no securities of the Issuer, including debt securities, are traded in Canada or another country on a marketplace as defined in National Instrument 21-101 Marketplace Operation or any other facility for bringing together buyers and sellers of securities where trading data is publicly reported.

Order

7. The Principal Regulator is satisfied that the FFCTO Revocation Order and the Cease to be a Reporting Issuer Order meet the tests set out in the Legislation for the Principal Regulator to make the order.

8. The decision of the Principal Regulator under the Legislation is that the FFCTO Revocation Order and the Cease to be a Reporting Issuer Order are granted.

DATED this 25th day of August, 2023.

OSC File #: 2023/0326