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“At this time we needed to take this step to create stability and stop the clock, as it were, so we’re able to restructure and reorder our affairs as we kind of wait in this period for an answer from the government,” Mr. Lyons said.

Along with protection from creditors, the court approved up to $30-million in debtor-in-possession financing, which was extended by some of its existing noteholders, part of a group that have been “supporting us for some time,” Mr. Lyons said.

Toronto-based Catalyst Capital Group Inc. is one of Mobilicity’s largest bondholders and it had been involved in litigation with the company but that is now frozen under the CCAA order. The firm said Monday it has been seeking a CCAA filing for about two weeks and “while Mobilicity’s management objected strenuously,” Catalyst is relieved it has now gone ahead.

“A CCAA filing allows creditors to have their proportionate rights protected,” Daniel Tisch, a spokesman for Catalyst, said in an emailed statement. “Under CCAA, it will now be impossible to prevent Catalyst from voting its full holdings. Any and all plans will require our approval. Catalyst remains committed to enforcing all its rights, and welcome the opportunity to do so now with the support of the court.”

If the transaction is approved, it will mean a seamless transition for our customers

The company is deep in debt and has been looking for a buyer for about a year. In May, it announced the agreement to sell to Telus but in early June, Industry Canada rejected the transfer of Mobilicity’s cellular airwaves, which it purchased in 2008 subject to a set-aside for new entrants to the wireless market.