Adam M. Slavens

Her Majesty the Queen in right of Ontario sought to lift a stay on its $330 billion health care cost recovery action against three tobacco companies (JTI-Macdonald Corp., Imperial Tobacco, Rothmans, Benson & Hedges Inc.) and eleven co-defendants, which was imposed under CCAA proceedings.

Ontario proposed to temporarily stay the effects of any judgment.

The court dismissed the motion, emphasizing the need to preserve the status quo in CCAA proceedings to facilitate a global resolution of significant claims.

Allowing Ontario's action to proceed would alter the level playing field, distract from restructuring efforts, and impose significant costs, prejudicing other stakeholders.

JTI-Macdonald Corp. (JTIM) sought an Initial Order under the Companies’ Creditors Arrangement Act (CCAA) following a $13.5 billion judgment from the Quebec Court of Appeal and other significant health care costs recovery actions.

The court granted the Initial Order, including a stay of proceedings against JTIM and other defendants, appointment of Deloitte Restructuring Inc. as Monitor, approval of administrative, directors', and tax charges, authorization to pay pre-filing and post-filing obligations, appointment of Blue Tree Advisors Inc. as Chief Restructuring Officer, and authorization to appeal the Quebec Judgment to the Supreme Court of Canada.

The court found JTIM to be an insolvent company to which the CCAA applies, and that a stay of proceedings was appropriate to facilitate a collective solution for all stakeholders.

In a CCAA proceeding, the Functionary and Terra Firma brought a motion to late file a claim and to approve a settlement agreement between them regarding the distribution of the debtor's funds.

The court allowed the late filing of the claim but ruled the Functionary's unsworn report inadmissible.

The court dismissed the motion to approve the settlement, finding that a settlement of claims against the debtor requires the consent of the debtor or the Monitor, neither of which had agreed to the settlement.

Self-represented long-term disability beneficiaries sought leave to appeal a sanction order from the Superior Court of Justice in the Nortel Networks CCAA proceedings.

The applicants challenged their binding status under the 2009 Representation Order for Disabled Employees and the 2010 Employee Settlement Agreement.

The Court of Appeal dismissed the motion for leave to appeal, finding that the stringent test for leave in CCAA proceedings was not met.

The proposed appeal lacked merit, the applicants were bound by the settlement agreement, and further delays in the protracted litigation were to be avoided.

The court also rejected a late-filed notice of constitutional question challenging sections 6(1) and 11 of the CCAA.

The Monitor in the CCAA proceedings of Nortel Networks Corporation brought a motion to pass its accounts and those of its legal counsel for the period from January 2009 to May 2016.

The fees sought totaled over $250 million CAD and USD combined.

The court applied the Belyea factors to assess the fairness and reasonableness of the fees.

Despite the unprecedented size of the fees, the court found them justified given the massive scale, complexity, and duration of the cross-border insolvency, the extraordinary powers granted to the Monitor, and the highly successful results achieved for the Canadian estate.

The accounts were approved in full.

The applicants, a group of real estate development companies, sought an Initial Order under the CCAA and the continuation of their NOI proceedings under the CCAA.

Concurrently, the foreign representative of the parent company sought recognition of Israeli insolvency proceedings as a foreign main proceeding under Part IV of the CCAA.

The court approved a Co-operation Protocol between the foreign representative and the proposed Monitor, recognized the Israeli proceeding as a foreign main proceeding, and granted the Initial Order.

The court also extended the stay of proceedings to related limited partnerships and approved various administrative and interim financing charges.

The appellants, holding unsecured crossover bonds, appealed a CCAA judge's decision that the common law 'interest stops' rule applies in CCAA proceedings, preventing them from claiming post-filing interest above their principal debt and pre-petition interest.

The Court of Appeal dismissed the appeal, confirming that the 'interest stops' rule is a fundamental tenet of insolvency law that applies to CCAA proceedings to ensure fair treatment of creditors and orderly administration.

The Court clarified that while creditors cannot legally claim post-filing interest, the rule does not preclude a negotiated CCAA plan from providing for such payments.

The moving parties (class action plaintiffs) brought a motion to quash appeals filed by the respondent objectors.

The court found that the appellants did not have a right of appeal under s. 30(3) of the Class Proceedings Act because they were not parties to the class proceeding.

Furthermore, they did not meet the requirements of s. 30(5) as they had not obtained leave to act as a representative party for an appeal from a judgment on common issues or an aggregate assessment.

The appeals were quashed and the motion to act as representative plaintiff was dismissed.

Invesco sought leave to appeal orders sanctioning a Plan of Compromise and Reorganization under the CCAA and approving a settlement that released Ernst & Young LLP from claims arising from its auditing of Sino-Forest Corporation.

The Court of Appeal denied leave, finding that the proposed appeals failed to meet the stringent test for leave in CCAA proceedings.

The appeal of the Sanction Order was moot, and the issues regarding the third-party release in the Settlement Order were governed by the court's prior decision in ATB Financial.

The EMEA Debtors sought leave to appeal an order approving an Allocation Protocol that provided for a joint trial by the Ontario Superior Court of Justice and the US Bankruptcy Court for the District of Delaware to allocate over US$7 billion in proceeds from the sale of Nortel assets.

The moving parties argued the joint trial violated the Ontario court's independence and that the parties had previously agreed to binding arbitration.

The Court of Appeal dismissed the motion for leave to appeal, finding the proposed appeal lacked prima facie merit as the joint trial did not infringe judicial independence and the relevant agreement did not mandate arbitration.

In CCAA proceedings, the applicant sought an order declaring that shareholder class action claims alleging losses from the purchase or sale of its securities constituted “equity claims” under s. 2 of the Companies’ Creditors Arrangement Act.

The applicant also sought a determination that indemnity and contribution claims advanced by auditors and underwriters in relation to those shareholder actions were likewise equity claims.

The court held that shareholder claims alleging losses from trading in the company’s securities fall squarely within the statutory definition of equity claims and are subordinated to creditor claims.

Indemnification and contribution claims arising from those shareholder actions were also characterized as equity claims because their nature derives from the underlying shareholder claims.

However, the court left open the possibility that claims for defence costs might not necessarily be equity claims depending on the outcome of the underlying litigation.