Adam Slavens

On a CCAA motion, the moving parties sought approval of a reverse vesting transaction and ancillary relief following a court-approved SISP with a stalking horse credit bid.

The court applied the s. 36(3) criteria and found the process was transparent, adequately marketed, monitor-supervised, and fair and reasonable in the circumstances.

The court accepted the monitor’s evidence that a going-concern outcome would produce materially better stakeholder outcomes than liquidation and would preserve enterprise value while reducing restructuring costs.

Applying the Harte Gold framework, the court held the reverse vesting structure was necessary, economically superior to viable alternatives, non-prejudicial to stakeholders relative to alternatives, and reflective of fair value for preserved intangibles.

The motion was granted and both the Reverse Vesting Order and Ancillary Order were approved.

In the receivership of the Stateview entities, Tarion Warranty Corporation brought a motion seeking declaratory relief on behalf of purchasers who had paid deposits for pre-construction homes.

Tarion argued that the deposits were subject to an express or constructive trust and sought a remedial constructive trust to elevate the purchasers' priority.

The court dismissed the motion, finding that the purchasers had contractually subordinated their interests to secured lenders.

While an express trust existed for contracts with early termination provisions, the funds were not segregated.

The court declined to impose a remedial constructive trust, as doing so would improperly upset the priority scheme under the Bankruptcy and Insolvency Act.

The Construction Receiver brought a motion for approval of its activities, fees, final distribution, and discharge.

Terra Firma, the highest-ranking secured creditor, brought a second motion seeking distribution of a $202,500 Park Levy Reserve collected from unrepresented condominium purchasers.

The court granted the Receiver's motion but dismissed Terra Firma's motion, finding that the Park Levy was mistakenly collected, never became the property of the debtor, and therefore could not form part of Terra Firma's collateral.

The Receiver was directed to return the funds to the unrepresented purchasers.

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.

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.

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.