Bankruptcy and Insolvency Law

Following a family law trial where the applicant was awarded child support and substantial costs, the respondent immediately filed for bankruptcy.

The applicant brought a motion seeking to allocate a portion of the trial cost award as legal fees related to child support so that the debt would survive bankruptcy under the Bankruptcy and Insolvency Act.

The court determined that the issues of decision-making and parenting time were inextricably linked to child support.

Ultimately, the court granted the motion, declaring that 75% of the trial costs constitute a support debt and are enforceable as a support order.

The court was asked to decide between the debtors’ application for protection under the Companies' Creditors Arrangement Act (CCAA) and the Toronto-Dominion Bank’s application for the appointment of a receiver.

After reviewing the facts and arguments, the court concluded that it was most just and convenient to appoint a receiver, dismissing the CCAA application.

The decision reviews the history of the debtors’ restructuring efforts, the positions of the parties, and the legal principles governing the choice between CCAA and receivership, ultimately finding that the interests of the senior secured creditor should prevail in the circumstances.

The moving creditors, Antoine Dwyane Small and Whayne Small, brought a motion under section 69.4 of the Bankruptcy and Insolvency Act to lift the automatic stay of proceedings.

They sought to continue their civil fraud action against the bankrupt, Richard Nicholson, in which they claimed damages of approximately $500,000 for fraud, misrepresentation, and breach of fiduciary duty.

The bankrupt opposed the motion, while the trustee did not oppose it.

The court granted the motion, lifting the stay to allow the fraud action to proceed, finding that the creditors would be materially prejudiced by a continued stay and that it was equitable to do so.

The court considered whether Baketree Inc. validly exercised its option to extend a commercial lease with Nico Properties Inc., or whether alleged defaults precluded the extension.

The court found that Baketree met all preconditions for extension, including payment of rent, compliance with lease terms, and maintenance of financial strength.

Even if there had been a default, the court would have granted relief from forfeiture.

However, Baketree lost its right to negotiate a purchase of the property under Schedule E due to prior defaults, and the court declined to grant relief from forfeiture for that right.

The trustee in bankruptcy, Goldhar & Associates Ltd., brought a motion to annul Qui Thieu Mac’s discharge from bankruptcy, arguing that the discharge was granted due to inadvertence in failing to file a notice of opposition.

The court found that there was a bona fide error, that opposition would have been filed but for the error, and that a discharge hearing would likely have led to a different result given the facts proven under section 173(1) of the Bankruptcy and Insolvency Act.

The court exercised its discretion to set aside the absolute discharge and granted the trustee’s motion.

The decision addresses three motions in a civil action: the plaintiffs’ motion to extend and validate service of their statement of claim, the defendants’ motion for a status hearing, and the defendants’ motion to dismiss the action for delay.

The court validates service on the individual defendants, finds that limitation period arguments raise triable issues, and concludes that both parties contributed to the delay.

The court grants the plaintiffs’ motion for a status hearing, dismisses the defendants’ motion to dismiss for delay, and sets a timetable for the action to proceed to trial.

The Receiver sought and obtained an Approval and Vesting Order (AVO) in connection with a settlement involving the sale of certain secured interests (the Maidstone Charges) and related indebtedness to the Canning Claimants.

The settlement resolved a $50 million claim in the receivership proceedings.

The court found the transaction fair, reasonable, and beneficial to stakeholders, and granted a limited sealing order over confidential economic terms of the transaction until closing, applying the test from Sherman Estate v. Donovan.

The Applicants sought an order extending the Stay Period under the Companies’ Creditors Arrangement Act, approving the Sixty-first Report of the Monitor, and approving the fees and disbursements of the Monitor, Monitor’s counsel, and Applicant’s counsel.

The court found the Applicants acted in good faith and with due diligence, that the extension was reasonable, and that the requested approvals were appropriate.

The motion was granted.

The plaintiffs moved for default judgment after the defendant, Maria Surovova, was noted in default for failing to attend examinations for discovery.

The court found that Surovova had fraudulently misrepresented herself as a mortgage broker, induced the plaintiffs to transfer $85,221.00 to her under false pretenses, and retained the funds.

The court granted default judgment, awarded punitive damages, and ordered that the judgment survive bankruptcy under s. 178(1) of the Bankruptcy and Insolvency Act.

Full indemnity costs and prejudgment interest were also awarded.

The applicant, Rothmans, Benson & Hedges Inc., brought an unopposed motion for an insurance settlement and bar order under the Companies’ Creditors Arrangement Act.

The court found that the record supported the requested relief and granted the motion.

This endorsement concerns ongoing insolvency proceedings under the Companies’ Creditors Arrangement Act (CCAA) involving JTI-Macdonald Corp., Imperial Tobacco Canada Limited, Imperial Tobacco Company Limited, and Rothmans, Benson & Hedges Inc. The specific motion, brought by the applicants, sought a Quebec Class Action Plaintiffs Notice Protocol Order.

The motion was unopposed and was granted by the court, with the requested order signed.

The applicants, a group of real estate development entities (Ashcroft Homes Group), sought to extend an initial Companies' Creditors Arrangement Act (CCAA) stay of proceedings to facilitate a restructuring.

Secured creditors, representing 84% of the total secured debt, opposed the extension and instead moved for the appointment of interim receivers.

The court found the applicants' restructuring plan lacked substance, noted a significant loss of confidence in management due to past conduct and outdated property valuations, and determined that the collaborative receivership approach proposed by the majority of secured creditors was more appropriate.

The motion to extend the CCAA stay was dismissed, and the motions for the appointment of receivers were granted.

The Applicants in a CCAA proceeding sought multiple orders, including approval for the sale of various real properties and shares, authorization for distributions to lenders, amendments to a Wind-Down Order to include new recourse lenders and clarify notice, amendments to a Lien Discharge Order to address possessory liens and insurance claims, and amendments to a Factoring Order.

The relief was unopposed and recommended by the Monitor and Chief Restructuring Officer.

The court granted all requested orders, finding that the transactions were in the best interests of stakeholders and that the court had jurisdiction under sections 11 and 36(3) of the CCAA, applying the Soundair Principles.

Cortland Credit Lending Corporation sought a declaration that Final Bell Holdings International Ltd.'s constructive trust claim against the Applicants (BZAM Ltd. et al.) was subordinate to Cortland's super priority security interest and corresponding DIP Lender's Charge in a Companies' Creditors Arrangement Act (CCAA) proceeding.

Final Bell opposed, arguing for the need to prove its fraudulent misrepresentation claim.

The court granted Cortland's motion, finding Final Bell's constructive trust claim to be an impermissible collateral attack on the court's Amended and Restated Initial Order (ARIO) and an equity claim under the CCAA, which ranks behind all ordinary creditors.

The court emphasized the importance of respecting CCAA orders and the "building block" nature of restructuring proceedings.

The Trustee in Bankruptcy, Goldhar & Associates Ltd., brought a motion to annul the automatic discharge of Qui Thieu Mac, a second-time bankrupt.

The Trustee intended to oppose the discharge due to prior bankruptcy, failure to provide income statements, and gambling contributing to the bankruptcy, but failed to file the opposition notice and report due to inadvertence.

The court noted the Trustee's lack of legal submissions and specific BIA sections relied upon for annulment.

The motion was adjourned sine die, requiring the Trustee to provide proper legal submissions addressing applicable BIA sections (e.g., 187(5), 187(9)) and relevant jurisprudence.

This motion concerned the approval of the Trustee in Bankruptcy's final statement of receipts and disbursements in the bankruptcy of Ametra Dave.

A creditor, Linda Zaplotinsky, objected to the Trustee's and its legal counsel's fees and disbursements, alleging mismanagement, ill-timed legal proceedings, and unnecessary costs.

The court found that while the Trustee's administration of assets was reasonable, the fees related to an unsuccessful property sale motion were not.

Consequently, the court exercised its discretion to reduce the Trustee's fees by $10,000 and its counsel's fees by $9,123.

The plaintiffs brought a motion for default judgment against the defendants, specifically Singa Bui, for misappropriation of loan funds while acting in a fiduciary capacity.

The plaintiffs sought damages, punitive damages, prejudgment interest, and an order that the judgment debt survive any bankruptcy proceedings under s. 178(1) of the Bankruptcy and Insolvency Act, citing fraud and defalcation in a fiduciary role.

The court granted the default judgment, finding that the deemed admissions established breach of contract, fraud, misappropriation, and breach of fiduciary duty.

The court also ordered that the judgment debt would survive bankruptcy.

Sandvine Corporation and its affiliates sought an initial order under the Companies’ Creditors Arrangement Act (CCAA), including an urgent 10-day stay of proceedings, extension of the stay to non-applicant entities (Procera II LP and other foreign subsidiaries), appointment of KSV Restructuring Inc. as monitor, and approval of interim financing (DIP) charge, administration charge, and directors' charge.

The court found the applicants insolvent, established jurisdiction in Ontario, and determined that the requested relief was necessary for the continued operation and restructuring of the integrated global business.

The Initial Order was granted, and a comeback hearing was scheduled.

The applicants, a group of companies undergoing CCAA proceedings, sought to extend the existing stay of proceedings to DAK Capital Inc., a non-debtor third-party guarantor involved in an arbitration with Canopy Growth Corporation.

Canopy opposed, arguing that CCAA s. 11.04 prohibits such an extension for guarantors.

The court, relying on the broad inherent jurisdiction under CCAA s. 11 and recent Ontario precedents, found that s. 11.04 is a clarifying provision, not a prohibitive one, and granted the temporary stay against DAK Capital to prevent distraction from the ongoing restructuring efforts.

Antibe Therapeutics Inc. (Antibe) commenced CCAA proceedings seeking a stay extension, while Nuance Pharma Ltd. (Nuance), Antibe's largest creditor, sought termination of the CCAA and appointment of a receiver, along with a declaration of constructive trust over funds.

The court found Antibe's CCAA application to be a defensive tactic with no realistic restructuring plan.

Given the unique circumstances, including Antibe's core business (a drug) being far from commercialization and the arbitral finding of Antibe's deliberate misrepresentation, the court terminated the CCAA proceeding and appointed a receiver over Antibe's property.

The court declined to rule on Nuance's trust claim at this stage.