Drake’s Apparel Company OVO in Legal Battle With Investor Over $4 Million Loan

Drake’s apparel company, October’s Very Own (OVO), is locked in a legal feud with an investor who recalled a $4 million loan and now says the rapper’s business owes double that amount.

OVO, the Toronto-based lifestyle brand founded by Drake, his manager Oliver El-Khatib and producer Noah “40” Shebib, made a deal last year with a Florida-based debt lending company called Applied Real Intelligence (A.R.I.). During a summer 2025 fundraise, A.R.I. lent OVO 5.2 million Canadian dollars ($3.7 million) via a series of convertible notes transactions.

Things went sour in early 2026, when A.R.I. claimed that OVO had defaulted on the loan due to late interest payments and demanded reimbursement. OVO acquiesced, entering into a repayment agreement with A.R.I. and wiring back $3.7 million this past May. But A.R.I. said this wasn’t enough; according to the lender, Drake’s company was also required to pay an additional fee of 5.3 million Canadian dollars ($3.8 million) as a consequence for defaulting.

On June 2, OVO sued A.R.I. in Toronto court, asking a judge to declare that it did not have to pay this additional amount, known as a make-whole fee. According to OVO, the company’s investment contract with A.R.I. stated that such a fee would only be due under a “specific circumstance” that did not occur here.

“In particular, although A.R.I. alleged defaults and expressly reserved its right to accelerate, A.R.I. did not accelerate the notes prior to negotiating and entering into forbearance terms,” reads the OVO lawsuit, obtained by Billboard. “Repayment in the context of and pursuant to the forbearance agreement does not trigger an entitlement to a make-whole fee.”

A.R.I. then responded on June 11 with a lawsuit of its own against OVO, this time in Vancouver. The lender is seeking in its case to force OVO to pay the make-whole fee, arguing that this amount was “designed to provide A.RI. with a minimum negotiated return and to protect A.RI. against the loss of the benefit of its bargain if the notes were repaid or otherwise terminated before maturity.”

In a statement announcing its lawsuit, A.R.I. says it “approached this transaction in good faith and viewed OVO as a compelling company with substantial brand value and long-term growth potential.”

“When defaults occurred, A.R.I. did not immediately pursue litigation,” continues the statement. “Instead, we worked extensively with OVO through a formal workout process and provided the company substantial time and flexibility to resolve the situation outside of court. OVO subsequently acknowledged both the defaults and the debt in writing under a formal forbearance agreement, made only a partial payment, and has now taken the position that millions of dollars remain unpaid despite clear contractual obligations. A.R.I. intends to fully enforce its legal rights and protect its investors through the courts.”

Reps for OVO and Drake declined to comment beyond the legal papers.

This article was originally published by Billboard Pro.