Adrienne Ho

This decision concerns an appeal by Zeifman Partners Inc., as Trustee in Bankruptcy of Oragin Foods Inc., from the disallowance by KPMG Inc., as Trustee in Bankruptcy of Organic Garage (Canada) Ltd., of a proof of claim for $6,760,280.89.

The claim was based on alleged intercompany loans and a note payable.

The court allowed the appeal in part, admitting the "Current Liability Component" ($2,917,423.11) as a proven unsecured claim, but dismissed the appeal regarding the "Long Term Liability Component" and "Note Payable Component," finding insufficient evidence that these were debts rather than equity contributions.

The decision provides a detailed analysis of the distinction between debt and equity in the context of related-party transactions in insolvency, and the applicable standards of review.

The Receiver sought an order for discharge and release, approval of its Third Report, statement of receipts and disbursements, and fees.

The Court declined to grant the discharge, citing CBJ’s unauthorized commencement of actions in Ontario and Alberta in breach of the Receivership Order.

The Court found CBJ’s disregard for court orders troubling and noted the lack of contrition or proper procedure to regularize its actions.

The motion for discharge was adjourned to allow for a more complete record and for the Receiver to advise on the value of the Ontario and Alberta actions to the estate.

The applicant, Waygar Capital Inc., as agent for Ninepoint Canadian Senior Debt Master Fund LP, sought the appointment of a receiver over the property of the respondents, El Mocambo Entertainment Inc. and related companies, under section 243 of the Bankruptcy and Insolvency Act and section 101 of the Courts of Justice Act.

The court reviewed the legal test and relevant factors for appointing a receiver, including the rights of secured creditors and the conduct of the parties.

Although the respondents did not oppose the application, the court, with the parties' agreement, adjourned the receivership to allow the proposed receiver to act as monitor for a short interim period to explore the possibility of maintaining the business as a going concern.

The application may be brought back on an urgent basis if necessary.

The court-appointed receiver brought a motion seeking a declaration that the debtor had no automatic right of appeal from an Approval and Vesting Order under the Bankruptcy and Insolvency Act, and an order denying leave to appeal.

The debtor argued it had an automatic right of appeal under s. 193(a) or (c) of the BIA, or alternatively sought leave under s. 193(e).

The Court of Appeal held that the debtor had no automatic right of appeal, as the order did not affect future rights or result in a direct loss exceeding $10,000.

The Court also denied leave to appeal, finding the proposed appeal lacked merit, did not raise an issue of general importance, and would unduly hinder the insolvency proceedings.

This motion addressed a receiver's application for an approval and vesting order (AVO) for the sale of properties, which was opposed by the debtors asserting their equitable right of redemption.

The debtors sought to delay the sale to secure financing, but their efforts were deemed highly conditional and uncertain.

The court applied the Soundair test, finding that the receiver conducted a robust and fair marketing process that yielded the best price.

The court emphasized that the debtors' inability to present a complete and unconditional financing package at the time of the motion was fatal to their request, distinguishing this case from precedents where redemption was allowed due to the debtor's immediate ability to pay.

The receiver's motion for the AVO was granted, and the debtors' cross-motion was dismissed.

This motion for directions was brought by the Receiver of Unit 417 in a condominium project to determine whether the purchaser, Gerald Rasmussen, was entitled to clear title despite having prepaid the final balance of his purchase price directly to the developer, Brightstar, rather than into a deposit trust account.

The Guarantee Company of North America (GCNA), a secured creditor, opposed, arguing Rasmussen's payment was not bona fide and its mortgage should prevail.

The court found Rasmussen to be a bona fide purchaser for value, ruling that his payment, though structured as a loan, was the final purchase price payment under the agreement of purchase and sale.

The court determined that the APS did not prohibit direct payment to the vendor for the final balance and that GCNA's mortgage did not take priority over Rasmussen's interest.

The Receiver was directed to close Rasmussen's purchase and vest clear title in his name.