Adrian Scotchmer

The appellant creditor appealed a decision upholding the Trustee's disallowance of its unsecured claim in the bankruptcy.

The claim was based on a promissory note and subsequent agreement, but no payments or acknowledgments had been made for over two years prior to the bankruptcy, rendering it statute-barred under the Limitations Act, 2002.

The court held that a statute-barred claim, being unenforceable at law, is not a claim to which the bankrupt is 'subject' under section 121(1) of the Bankruptcy and Insolvency Act, and is therefore not provable in bankruptcy.

The appeal was dismissed.

In the CCAA proceedings of U.S. Steel Canada Inc., its parent company, United States Steel Corporation, sought approval of several proofs of claim totaling over $2 billion.

Various stakeholders objected, arguing that the intercompany loans should be re-characterized as 'equity claims' under the CCAA and that the security granted for certain advances was void as a fraudulent preference or unenforceable for lack of consideration.

The court rejected the objections, finding that the parent company had a reasonable expectation of repayment when the advances were made, and that the security was validly granted for fresh consideration and did not constitute a fraudulent preference.

The claims were confirmed as debt claims.

The moving party sought default judgment against the defendants for fraudulently obtaining pre‑retirement death benefits and health and welfare benefits by falsely claiming that a union member had died.

The defendants had previously pleaded guilty in criminal proceedings involving the same fraudulent scheme and were noted in default in the civil action.

The court held that the admitted facts established fraud, deceit, fraudulent misrepresentation, conspiracy, conversion, and unjust enrichment.

Judgment was granted for the amounts paid out under the benefit plans, together with punitive damages and declarations preventing the defendants from receiving future benefits until the debt was repaid or permitting set‑off against any future entitlements.