Zefiro's preliminary injunction denied by court

Executive Summary

• Zefiro Methane Corp. founder and former chairman Dr. Talal Debs reports that a New York court denied a preliminary injunction sought by David McGrath, a related party of the incumbent board, on February 27, 2026. The court ruled that McGrath failed to prove likelihood of success or irreparable harm.
• Dr. Debs and concerned shareholders have filed a motion to dismiss the underlying New York case, scheduled for March 19, 2026.
• The release highlights a dispute over the issuance of 13,214,494 common shares to interim CEO Catherine Flax, David McGrath, and Michael McGavick on January 27, 2026, immediately prior to the annual general meeting record date. Shareholders are seeking remedies from the B.C. Securities Commission to rescind these shares or prevent them from voting.

Key Details

• Litigation Outcome: A motion for preliminary injunction filed by David McGrath on December 23, 2025, was denied by a New York court on February 27, 2026.
• Court Rationale: The court denied the motion because Mr. McGrath did not prove a likelihood of success on his claims nor irreparable harm.
• Next Legal Steps: Dr. Debs and concerned shareholders (X Machina Capital Strategies Fund I GP LLC and X Machina Capital Strategies LP) filed a motion to dismiss the New York case, with a hearing scheduled for March 19, 2026.
• Share Issuance Dispute: On January 27, 2026, the company issued 13,214,494 common shares to:
  • Catherine Flax (Interim CEO)
  • David McGrath
  • Michael McGavick (McGrath's brother-in-law)
• Regulatory Action: Concerned shareholders are requesting remedies from the B.C. Securities Commission at a hearing continued for March 3 and March 4, 2026. Remedies sought include rescinding the issuance of the debt settlement shares or preventing them from being voted at the upcoming shareholder meeting.
• Shareholder Meeting: The annual general and special meeting of shareholders is currently scheduled for March 20, 2026.
• Investigation Context: The incumbent board launched an investigation into Dr. Debs on October 9, 2025, following his announcement to nominate an alternative slate of directors. The investigation scrutinized approximately $30,000 USD of expenses, with less than $600 USD remaining in question. The board has not released findings but cited the investigation in its management information circular to oppose Dr. Debs' nominees.
• Shareholder Position: Dr. Debs, representing the largest single shareholder, holds beneficial ownership or control over 20,914,750 common shares (23.12% of issued and outstanding shares). He does not intend to vote 500,000 personal shares due to a side letter.

Notable Quotes

• "It is important to note that the N.Y. litigation was used by the incumbent directors as a pretext for a frivolous investigation into Dr. Debs, which was launched by the incumbent directors at considerable expense to shareholders and was followed by a series of bad faith steps taken by the incumbent directors seeking to entrench themselves."