Alexandra Teodorescu

The interim receiver sought an order to release holdback funds totaling $449,881.87 to be added to the proposal fund for distribution among creditors.

The respondent claimed the funds based on a mortgage that had been discharged and alternatively sought a constructive trust.

The court found that the mortgage constituted both a fraudulent conveyance under the Fraudulent Conveyances Act and an unjust preference under the Assignments and Preferences Act.

The court dismissed the respondent's motion and granted the interim receiver's motion, allowing the holdback funds to be distributed to creditors in accordance with the approved proposal.

The decision addresses motions regarding the appointment of representative counsel for current and former employees and retirees of Hudson’s Bay Company ULC and related entities in ongoing Companies’ Creditors Arrangement Act (CCAA) proceedings.

The Court declined to appoint any of the nominated law firms as representative counsel at this stage, instead appointing the Honourable Herman Wilton-Siegel as an independent third party to evaluate proposals and make a recommendation.

The Court also approved amendments to the Sale and Investment Solicitation Process (SISP) to remove the company’s art and artifact collection from the SISP and to appoint Heffel Gallery Limited to conduct a separate auction for the collection, subject to further court approval of procedures.

The reasons review the legal framework for appointing representative counsel and the importance of balancing stakeholder interests in complex insolvency proceedings.

This supplementary endorsement addresses a request from JTI-Macdonald Corp. regarding the adequacy of notice elements in the Claims Procedure Order within the ongoing Companies' Creditors Arrangement Act (CCAA) proceedings.

The court confirmed its satisfaction that the notice elements in the Claims Procedure Orders are reasonable in the circumstances, addressing an oversight from previous submissions.

The Superior Court of Justice addressed multiple motions within the complex Companies’ Creditors Arrangement Act (CCAA) proceedings of JTI-Macdonald Corp., Imperial Tobacco Canada Limited, Imperial Tobacco Company Limited, and Rothmans, Benson & Hedges Inc. The court granted a stay extension until January 31, 2025, and approved Meeting Orders and Claims Procedure Orders.

These orders facilitate the advancement of comprehensive Plans of Arrangement, developed by the court-appointed Mediator and Monitors, aiming for a Pan-Canadian global settlement of tobacco claims totaling $32.5 billion.

The court found the plans were not "doomed to fail" despite outstanding issues regarding financial allocation among the Tobacco Companies and the creditor status of JTI-Macdonald TM Corp.

Representative Counsel for Non-Union Employees and Retirees sought approval for $200,000 in additional costs, including legal fees and financial advisor costs, to be paid from distributions to employees and retirees in the Metroland Media Group Ltd. proposal.

The request was unopposed by the Proposal Trustee and supported by the affected stakeholders.

The court, exercising its discretion under section 197(1) of the Bankruptcy and Insolvency Act, approved the costs, finding them reasonable based on factors such as the extensive activities undertaken and the fact that the costs were paid by the employees themselves, causing no prejudice to other creditors.

The Thomas Canning Claimants appealed two procedural decisions by the Claims Officer in the Bridging Finance Inc. receivership, which denied their requests for extensive pre-hearing disclosure of documents from the Receiver and examinations of third-party witnesses.

The Claimants argued these denials were procedurally unfair and prioritized expediency over their disclosure rights.

The court dismissed the appeal, finding the Claims Officer's decisions were discretionary case management orders entitled to deference, and that no palpable and overriding error or failure of natural justice occurred.

The court emphasized that receivership claims processes are intended to be expeditious and summary, unlike normal civil litigation.

This motion concerned the interpretation of the Wage Earner Protection Program Act (WEPPA) regarding Service Canada's subrogation rights to recover payments made to employees from an insolvent employer's distribution.

Metroland Media Group Ltd. made a proposal to its creditors, entitling unsecured creditors to a 17% distribution.

Service Canada had approved payments to former non-unionized employees under WEPPA for unpaid severance pay.

The issue was whether Service Canada was entitled to recover these payments on a dollar-for-dollar basis from the employees' distribution or only a pro-rata share (17 cents on the dollar) as an unsecured creditor.

The court held that Service Canada is entitled to a dollar-for-dollar recovery, up to the amount of the WEPP payment, from the employee's distribution before the employee receives any balance.

The defendant/plaintiff by counterclaim, Dr. Eric Owens, brought a motion seeking leave to amend his amended statement of defence and counterclaim to include claims for negligence, negligent misrepresentation, and increased damages of $8 million.

The plaintiff/defendant by counterclaim, Navigator Limited, opposed, arguing that the proposed amendments introduced new causes of action after the expiry of the applicable limitation period and that the increased damages claim was not tenable in law due to contractual limitation clauses.

The court granted Dr. Owens leave to amend, finding that the proposed claims arose from the same factual matrix as the original pleadings and were clarifications or alternative remedies, not new causes of action.

The court also determined that the applicability and effect of the contractual limitation of liability clauses should be assessed at a hearing on the merits, not at the pleadings stage.

The defendants appealed an Associate Judge's order that required the net proceeds from the sale of two properties to be held in trust or paid into court upon the discharge of certificates of pending litigation (CPLs).

The defendants argued the plaintiff failed to make full and fair disclosure on the initial ex parte motion for the CPLs and that the Associate Judge failed to properly apply the test to vacate a CPL.

The Superior Court of Justice dismissed the appeal, finding no palpable and overriding error or error in law in the Associate Judge's assessment of material disclosure, balancing of equities, or exercise of discretion to require security.

The defendants brought an urgent motion to discharge certificates of pending litigation (CPLs) obtained ex parte by the plaintiff on four properties.

The defendants argued the CPLs should be discharged due to material non-disclosure by the plaintiff regarding the nature of the transactions and an alleged fraud.

The Master found no material non-disclosure.

However, to facilitate pending sales, the Master ordered the CPLs on two properties discharged on the condition that net proceeds be held in trust or paid into court.

The CPLs on the other two properties, which had already been sold to arm's length third parties, were discharged at the plaintiff's expense.

The proposal trustee moved for court approval of a bankruptcy proposal for the debtor company.

The debtor's parent company, which held the largest monetary claim, opposed the proposal, but its vote was disregarded by the chair of the creditors' meeting as a related party under s. 109(6) of the Bankruptcy and Insolvency Act.

The parent company objected to the scope of the release granted to the debtor's sole director, specifically regarding potential claims for preferences and transfers at undervalue.

The court upheld the exclusion of the related party's vote, finding it would defeat the purpose of the proposal and harm unrelated trade creditors.

Applying the Metcalfe criteria, the court found the director releases to be fair and reasonable, and approved the proposal.

This case involved two motions within a bankruptcy proceeding.

The bankrupt, Dennis Wing, sought to lift a freeze direction imposed by the Ontario Securities Commission (OSC) on his registered retirement saving plan (RRSP) and locked-in retirement accounts (LIR), arguing they were exempt assets under the Bankruptcy and Insolvency Act (BIA).

The OSC, in turn, sought a declaration that a monetary penalty and costs ordered against Wing for violating a cease trade order (CTO) were not claims provable in bankruptcy, allowing them to enforce the claims post-discharge.

The court dismissed Wing's motion, finding the freeze direction served a purpose given potential opposition to his discharge.

The court granted the OSC's motion, applying the three-part test from AbitibiBowater and Orphan Well Association, concluding that the OSC was not a creditor, the obligation was not incurred before bankruptcy, and the claim's monetary value was too speculative at the date of bankruptcy.

The court also found that a subsequent settlement agreement superseded an earlier undertaking by the OSC regarding enforcement.

Domfoam International Inc., an applicant in CCAA proceedings, sought leave under Rule 39.02(2) of the Rules of Civil Procedure to examine the president (Terry Pomerantz) and an employee (John Howard) of Domfoam Inc. (the Purchaser) as witnesses in relation to the Purchaser's motion to set aside a distribution order.

The core dispute concerned whether proceeds from an anti-trust class action (Dow Proceeds) were conveyed to the Purchaser in a prior transaction.

The court applied a four-part test for granting leave, finding that the examination of Pomerantz was relevant and responsive to matters raised during cross-examination of the Purchaser's lawyer, and that Domfoam provided a reasonable explanation for the delay.

However, leave to examine Howard was denied as the relevant issues concerning him were known prior to the initial cross-examination, and proportionality weighed against it.

The appellants appealed the disallowance of their claims in a bankruptcy proposal proceeding.

They claimed a 20% beneficial interest in the proceeds of a commercial property sale based on an amended trust declaration, and advanced an unsecured claim for damages alleging oppressive conduct.

The court dismissed the appeal, finding no certainty of intention to create an express trust, no basis for a constructive trust, and no evidence of oppressive conduct by the bankrupt corporation.

The Applicants, a group of Essar Steel Algoma entities, brought two motions in their CCAA proceedings: (i) for approval of a DIP extension agreement with existing DIP lenders, and (ii) for the appointment of a restructuring committee.

The DIP extension was opposed by various stakeholders including the USW, retirees, and GIP Primus, LP, who argued against the short term and potential leverage of the existing DIP lenders who were also Term Lenders.

The court dismissed the DIP extension motion, finding it would not enhance the prospects of a viable restructuring outcome, citing concerns about the alignment of interests between DIP and Term Lenders and the short-term nature of the proposed extension.

The motion for a restructuring committee was also dismissed, as the court found it would create unnecessary overlap with the existing Chief Restructuring Advisor and would not effectively address the core issues preventing restructuring, primarily labour negotiations.

Essar Capital Limited and USW Local 2251 brought motions within a Companies’ Creditors Arrangement Act (CCAA) proceeding.

Essar Capital sought to re-open the Sale and Investment Solicitation Process (SISP) and compel the disclosure of information to Essar Global for a potential bid.

Local 2251 sought court advice on engaging in discussions with Ontario Steel Investments Ltd. regarding potential transactions.

The court dismissed both motions, finding no basis to interfere with the established SISP, noting Essar Global's prior failure to demonstrate financial capability and the lack of a formal bid from Ontario Steel.

The court emphasized the need to maintain the integrity of the court-ordered process and avoid delays detrimental to the restructuring.

The applicants, a group of Essar Steel Algoma entities under CCAA protection, moved for court approval of a Term Sheet with Cliffs Mining Company for the supply of iron ore pellets.

The motion was opposed by USW Locals and Algoma retirees, who sought disclosure of commercial terms and objected to provisions preventing disclaimer of the agreement and allowing Cliffs to terminate if an Essar Global entity acquired Algoma.

The court approved the Term Sheet, finding it beneficial for Algoma's restructuring by ensuring a stable and technically suitable iron ore supply.

The court dismissed the objections, emphasizing the urgency of approval, the confidentiality of pricing, and that the Term Sheet's provisions did not unlawfully fetter judicial discretion under CCAA section 32 or unduly prejudice stakeholders.

The United Steelworkers Local Union 2251, supported by USW Local 2724 and Essar Algoma retirees, brought a motion to qualify a "Subject Bidder" as a Phase II Bidder in a Companies' Creditors Arrangement Act (CCAA) proceeding.

The Subject Bidder had been disqualified by Essar Algoma, its Chief Restructuring Advisor, Financial Advisor, and the Monitor for failing to provide satisfactory evidence of financial capability to consummate a transaction.

The union argued it was not properly consulted in the disqualification decision and that it should have been allowed to meet with the Subject Bidder.

The court dismissed the motion, finding that the union's consultation rights under the Sale and Solicitation Process (SISP) did not extend to decisions on a bidder's financial capability, and that the court should not second-guess the business judgment of the CCAA applicants and their professionals.

In the context of CCAA restructuring proceedings, the applicants sought approval of a grievance claims procedure to resolve approximately 3,000 outstanding grievances.

USW Local 2251 opposed the motion, arguing that the CCAA stay did not apply to grievances, that imposing a new procedure impermissibly amended the collective agreement, and that staying the grievance process violated section 2(d) of the Charter.

The court granted the motion, holding that the CCAA permits staying grievance procedures and imposing a claims process, which does not constitute an amendment to the collective agreement.

The court also found no Charter violation and held that under the doctrine of paramountcy, the CCAA stay provisions prevail over the grievance arbitration requirements in the provincial Labour Relations Act.

Following dismissal of a motion seeking production of documents in insolvency proceedings under the Companies’ Creditors Arrangement Act, the court determined the quantum of costs payable to the successful parties.

Applying the reasonableness principle and the factors in Rule 57.01 of the Rules of Civil Procedure, the court assessed costs claimed by the monitor, the creditors’ committee, and the applicants.

The court rejected arguments that certain participants should receive reduced or no costs and instead fixed reasonable amounts reflecting their participation in the motion.

Costs were awarded to each successful party and ordered payable within 30 days.