Bankruptcy and Insolvency Law

The court considered a motion by msi Spergel Inc., as Administrator, for approval of Danny Angelatos’s consumer proposal under the Bankruptcy and Insolvency Act.

Canadian Tire Bank opposed, arguing Angelatos was not eligible because his assets exceeded his liabilities and creditors were willing to make arrangements outside the proposal.

The court found Angelatos met the definition of “insolvent person” under the BIA, as he was unable to meet his obligations as they became due, and distinguished the authorities relied on by the Bank.

The court also found the proposal was reasonable and fair to both debtor and creditors, given the family’s circumstances and the creditors’ approval.

The proposal was approved, and costs awarded to the Administrator.

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 Applicants sought approval of a Restructuring Framework Agreement (RFA) in ongoing CCAA proceedings.

The Court declined to approve the RFA, finding it neither necessary nor appropriate at this time.

The decision details the reasons for refusing approval, including concerns about the appropriateness of granting control and veto rights to the Lenders, the lack of disclosure of the Budget, and the sufficiency of existing court and Monitor oversight.

The Court also set out directions for ongoing cash flow monitoring and reporting by the Monitor.

The third parties moved for summary judgment to dismiss the third party claim brought by the defendants, Michael Gillis and Julie Joanisse Gillis, against their financial advisors and firm.

The court found that the causes of action arose before and during the defendants’ bankruptcy and thus vested in the trustee in bankruptcy.

The claims were not transferred back to the defendants and were also found to be statute-barred.

The court granted summary judgment dismissing the third party claim and struck the action as a nullity.

This decision grants initial relief under the Companies’ Creditors Arrangement Act (CCAA) to Hudson’s Bay Company ULC and related entities, including a stay of proceedings, approval of DIP financing, and various charges to facilitate restructuring.

The court reviews the history and financial distress of Hudson’s Bay, the legal standards for CCAA relief, and the appropriateness of extending the stay to non-applicant parties and co-tenants.

The judgment also addresses the maintenance of the cash management system, appointment of a monitor, and the criteria for administration and directors’ charges.

The court finds the relief sought is necessary and appropriate to stabilize operations and maximize value for stakeholders during the initial stay period.

The Royal Bank of Canada applied for a bankruptcy order against Nuvoola Inc., which the debtor opposed primarily on jurisdictional grounds, arguing its head office had moved to Quebec.

The court analyzed the definition of the "locality of the debtor" under the Bankruptcy and Insolvency Act, finding that the debtor's president, accounting records, and banking activities were centered in Ottawa, and that the debtor had agreed to Ontario jurisdiction in its commitment letters.

The court also determined that the debtor had committed an act of bankruptcy by failing to meet its liabilities generally as they became due.

Consequently, the court granted the application and issued the bankruptcy order, appointing MNP Inc. as the Licensed Insolvency Trustee.

The applicant, a mortgagee under a matured and defaulted Vendor Take Back mortgage, applied for the appointment of a court-appointed receiver over a commercial property in Ottawa.

The respondent mortgagor opposed the application, disputing the validity and amount of the debt in separate ongoing proceedings in Toronto.

The court dismissed the application, finding no evidence of insolvency to engage the Bankruptcy and Insolvency Act and no underlying proceeding to support an interlocutory receivership under the Courts of Justice Act.

Additionally, the court noted that receivership is an extraordinary remedy, the mortgage lacked a contractual receivership clause, and there was sufficient equity in the property to protect the debt.

This endorsement addresses a case conference requested by Sergio Grillone, an undischarged bankrupt, seeking directions regarding his proposed appeal from a scheduling endorsement and related matters in ongoing bankruptcy proceedings.

The court finds that Mr. Grillone has no right of appeal from the scheduling endorsement, as no order has been made from which an appeal lies, and dismisses his proposed motion as frivolous, vexatious, or an abuse of process under rule 2.1.01.

The decision details the procedural history, the positions of the parties, and the court’s reasoning for dismissing the motion.

The decision concerns a motion by creditors Jennifer Look-Hong and Geoffrey MacKay in the bankruptcy of The Aggressive Good Inc. The motion sought, among other things, to challenge the eligibility of Christopher Falconi to act as an inspector and to have his votes at the first meeting of creditors revoked.

The court found that the Trustee made a palpable and overriding error in determining the date Mr. Falconi ceased to be a director, and that Mr. Falconi was not dealing at arm’s length with the debtor within the year prior to bankruptcy.

The court also found that Mr. Falconi was ineligible to act as an inspector due to his involvement in contested actions against the estate.

The motion was granted, and the order was signed as requested, with a new meeting of creditors to be held.

The Monitor, FTI Consulting Canada Inc., brought a motion for an approval and vesting order in respect of the Purchased Assets and the sale thereof to Vault or an affiliate pursuant to the Rifco Asset Purchase Agreement, and for a stay extension order.

The Court approved the Rifco APA and the AVO, finding the process reasonable, the requirements of the Companies' Creditors Arrangement Act satisfied, and the transaction in the best interests of stakeholders.

The stay extension was also granted.

This endorsement grants, with one exception, the relief sought by the Receiver in the receivership of Antibe Therapeutics Inc., including approval of a sale transaction with Taro Pharmaceuticals Inc. via a reverse vesting order.

The court finds the transaction and process fair, maximizes value for stakeholders, and preserves key tax and intellectual property attributes.

The only relief not granted is the proposed interim distribution to unsecured creditors, as the court is not satisfied that sufficient information exists regarding unresolved claims and holdbacks.

The court provides guidance for a future motion once these issues are resolved.

The court approved a Settlement and Mutual Release Agreement regarding the administration of syndicated mortgage loans and projects affiliated with Fortress Real Developments Inc. The Trustee, FAAN Mortgage Administrators Inc., sought approval to enter into the agreement, direct payment of the settlement, and authorize distribution to investors.

The court found the settlement appropriate, noting no better alternatives existed and that the agreement provided certainty and at least a nominal recovery for investors after significant delay.

This endorsement concerns a motion by FAAN Mortgage Administrators Inc., as Court-appointed Trustee of Building & Development Mortgages Canada Inc. (BDMC), for approval of its 30th and 31st Reports, its fees and disbursements, a sealing order for certain confidential exhibits, and authorization to distribute the Fortress Holdback and Future Fortress Amounts to investors.

The motion was unopposed.

The court approved the Trustee’s activities and fees, granted the sealing order, and authorized the distribution to investors, finding these steps appropriate and necessary to protect investor interests and confidential information.

This endorsement concerns a joint motion brought by the court-appointed Monitors for JTI-Macdonald Corp., Imperial Tobacco Canada Limited, Imperial Tobacco Company Limited, and Rothmans, Benson & Hedges Inc. in their ongoing Companies’ Creditors Arrangement Act (CCAA) proceedings.

The Monitors sought a Sanction Protocol Order to establish the date for the Sanction Hearing, ratify the litigation timetable, approve the dissemination of the Agenda and Sanction Hearing procedure, approve the Omnibus Sanction Hearing Notice, and set the deadline for Sanction Hearing Objection Notices.

The motion was unopposed and was granted by the court, with three orders signed.

This motion concerned the approval of a sale process and transaction by The Fuller Landau Group Inc., acting as Receiver, for the Real Property owned by the Debtor, Chacon Strawberry Fields Inc. The Receiver sought approval for the sale, a vesting order, and an interim distribution to the first secured lender, First Source Financial Management Inc. The respondents (debtors) requested an adjournment and access to confidential sale information to facilitate a redemption, while a third-party (unsuccessful bidder) sought consideration of a late offer.

The court denied the respondents' and third-party's requests, finding their redemption plan insufficient and their attempts to interfere with the established sales process inappropriate.

The court granted the Receiver's motion in its entirety, approving the sale, vesting order, interim distribution, and a sealing order for commercially sensitive information, affirming the integrity and efficacy of the court-supervised sales process.

The Applicants sought the appointment of a receiver over several respondent companies, including those jointly owned and those solely controlled by one of the individual respondents, due to alleged misappropriation of funds, mortgage defaults, and corporate oppression.

The court dismissed the application, finding that the statutory bases for appointing a receiver (Courts of Justice Act, Bankruptcy and Insolvency Act, Business Corporations Act) were not met.

The court determined there was no underlying action for interlocutory relief, no irreparable harm shown given the sufficient value of the secured property, and the request for relief against solely-owned companies was brought too late.

The Landlords (Vince and Colleen Battista) brought a motion seeking an order declaring that the stay of proceedings under section 69.3 of the Bankruptcy and Insolvency Act (BIA) does not apply to the eviction provisions of a Landlord and Tenant Board (LTB) order, or alternatively, lifting the stay under section 69.4 of the BIA.

The LTB order required the bankrupt tenant (Justin Evan Stevenson) to vacate the unit due to non-payment of rent.

The court found that the eviction provisions of the LTB order are not "claims provable" under section 121(1) of the BIA, and therefore the automatic stay does not apply.

Alternatively, the court would have lifted the stay as it would be just and equitable and would not affect other creditors.

The motion was granted, and costs were awarded to the Landlord.

The Body Shop Canada Limited (TBS Canada) brought companion motions in its CCAA proceeding seeking approval of an asset purchase agreement (APA), a sealing order, corporate name change, assignment of material agreements, expansion of the Monitor's powers, a declaration of WEPPA eligibility for terminated employees, and an extension of the stay of proceedings.

A key aspect was seeking declaratory relief regarding franchise disclosure obligations under the Arthur Wishart Act, 2000, to facilitate the APA closing, as the UK Purchaser could not provide a disclosure document within the required timeframe.

The court granted all requested relief, finding the APA transaction beneficial for stakeholders, the sale process reasonable, and the franchise disclosure exemption appropriate given the Purchaser's sophistication and consent, and the critical need to close the transaction to preserve jobs and value.

The Trustee in Bankruptcy sought an order for the repayment of $20,005.37 from the undischarged bankrupt and her son, representing an overpayment of surplus funds due to an erroneous interest calculation by the Office of the Superintendent in Bankruptcy.

The funds, initially paid to the bankrupt, were subsequently transferred multiple times and were ultimately held in an account controlled by the son.

The court found that the funds were paid under a mistake of fact and that neither the bankrupt nor her son had a legal or equitable right to retain them.

The court granted the Trustee's application, ordering the repayment of the funds.

The Receiver sought orders to approve a construction management contract and related financing for the Heart Lake Project, and to authorize amendments or disclaimers of pre-sale agreements for the Uptowns Project.

The court granted the relief, finding it was the best path to maximize stakeholder recovery, noting that the proposed amendments to pre-sale agreements offered homebuyers an option to retain value or claim deposits from a surety policy, and that disclaiming agreements was necessary for financing and project completion.

The court also approved sealing certain financial information to protect future marketability.