Bankruptcy and Insolvency Law

This is an appeal from a bankruptcy order against River Green (Thunder Bay) Inc. The appellant, John Beals, a shareholder, argued that the bankruptcy application by BNL Contracting Ltd. was brought for an improper purpose, relying on section 43(7) of the Bankruptcy and Insolvency Act.

The Court of Appeal upheld the application judge's decision, finding no palpable and overriding error in the rejection of the improper purpose allegation as speculative.

The court emphasized the highly deferential standard of review for discretionary decisions under section 43(7) and noted the appellant's failure to cross-examine the respondent's principal on the alleged conspiracy.

The Court of Appeal for Ontario refused leave to appeal a sealing order issued by a CCAA supervising judge in the Laurentian University insolvency proceedings.

The moving parties, including faculty unions, sought access to confidential documents (letters between Laurentian and the Ministry of Colleges and Universities) that were sealed to protect restructuring efforts.

The Court applied the Sierra Club test for sealing orders and the four-factor test for leave to appeal in CCAA cases, finding the proposed appeal was not prima facie meritorious, would unduly hinder the time-sensitive restructuring, and was not of sufficient significance to the action.

The court emphasized deference to the supervising judge's discretion in complex CCAA matters.

The appellant, an undischarged bankrupt, sought an extension of time to file a notice of appeal from a lower court order that declared his debts would survive bankruptcy and lifted a stay of proceedings.

The respondent opposed the extension, arguing there was no right to appeal without leave and that the appeal lacked merit.

The respondent also brought a cross-motion for security for costs.

The Court of Appeal granted the extension of time, finding that the appellant had a right to appeal under sections 193(c) and 193(a) of the Bankruptcy and Insolvency Act, and that the proposed appeal had arguable merit.

The court dismissed the respondent's cross-motion for security for costs, concluding that the "other good reason" test under Rule 61.06(1)(c) of the Rules of Civil Procedure was not met, given the appellant's impecuniosity and the arguable merit of the appeal.

The respondent credit union brought a motion to quash an appeal filed by debtors from a receivership order.

The order appointed a receiver over two residential properties pursuant to the Bankruptcy and Insolvency Act and the Courts of Justice Act.

The appellants sought to appeal without leave.

The court held that no appeal as of right existed and declined to grant leave to appeal, finding that the appeal did not raise an issue of general importance, was not prima facie meritorious, and would unduly hinder the receivership proceedings.

The motion was granted and the appeal quashed with costs fixed at $20,000.

The respondent brought a claim for damages arising from the denial of payment under a life insurance policy.

The motion judge dismissed the appellant's motion for summary dismissal based on lack of capacity and granted the respondent standing to bring the action notwithstanding his prior bankruptcy.

The appellant appealed, disputing whether the motion judge's order was made pursuant to the Bankruptcy and Insolvency Act or inherent jurisdiction.

The Court of Appeal upheld the motion judge's decision, finding that the order was made pursuant to inherent jurisdiction as it was a civil action for damages brought years after discharge from bankruptcy, not a bankruptcy proceeding.

Appeal from a motion judge's order varying child and spousal support orders from a 1999 judgment.

The respondent sought to vary support based on changed circumstances, including health issues and reduced income.

The motion judge terminated spousal support as of December 31, 2002, based on the appellant's material change in circumstances (employment and remarriage), and reduced child support from 2004 onwards due to the respondent's declining income.

The appellant appealed the variation of support orders and the dismissal of a fraudulent conveyance application.

The respondent cross-appealed the refusal to award costs.

The Court of Appeal allowed the appeal in part regarding child support, dismissed the appeals regarding spousal support and fraudulent conveyances, and dismissed the cross-appeal on costs.

The appellant, former CEO and chairman of Sino-Forest Corporation (SFC), appealed a trial judgment awarding damages of $2.627 billion plus $5 million in punitive damages for fraud and breach of fiduciary duty.

The appellant argued that the litigation trust lacked standing to pursue claims that overlapped with class actions, that the damages award created double recovery risks, and that the transfer of assets constituted an election barring the claim.

The Court of Appeal upheld the trial judgment, finding that the litigation trust held separate and distinct corporate causes of action from those of individual shareholders and noteholders in the class actions, that the damages award was properly calculated based on SFC's losses, and that no election doctrine applied.

This appeal concerns whether a court has jurisdiction to extinguish a third party's gross overriding royalty (GOR) interest in land through a vesting order in a receivership proceeding.

The Court of Appeal held that while the court has jurisdiction under section 243 of the Bankruptcy and Insolvency Act to grant vesting orders, the motion judge erred in exercising that jurisdiction to extinguish the appellant's GORs, which constituted interests in land akin to ownership interests rather than fixed monetary claims.

However, the appellant failed to appeal within the prescribed 10-day period under the BIA Rules, and the justice of the case did not warrant an extension of time.

The appeal was dismissed, though the appellant retained the $250,000 payment it had received.

The plaintiffs, Henry Jung and Long Ocean Holding Ltd., brought two motions for summary judgment seeking the return of deposits plus interest for commercial and residential units in the former Trump Tower.

The defendant, Talon International Inc., counterclaimed for forfeiture of the deposits, alleging breach of contract.

The court granted summary judgment to the plaintiffs, finding that the agreements of purchase and sale were terminated through no fault of the purchasers due to Talon's receivership and subsequent sale of the units to a third party.

The court also found Talon's statements of adjustments to be aggressive and overreaching, and that the plaintiffs' actions for specific performance were not a breach of contract.

The appellant appealed a motion judge's decision declining to approve the sale of property (79 Bramsteele Road, Brampton, Ontario) by a court-appointed receiver to the appellant.

The property was owned by a religious charitable organization that became insolvent.

The receiver entered into an agreement to sell the property to the appellant, but the motion judge declined approval, instead establishing a process to permit assignment of the first mortgage held by the respondent mortgagee.

The Court of Appeal found the motion judge erred in applying the second Soundair duty by failing to properly consider the interests of creditors and the appellant as purchaser.

The court allowed the appeal and ordered a new hearing.

A creditor sought to void a transfer of a matrimonial home to a spouse as a transfer at undervalue under section 96 of the Bankruptcy and Insolvency Act.

The debtor and his spouse purchased a home in joint names, with the spouse making non-monetary contributions through household management and childcare.

The Court of Appeal upheld the dismissal of the creditor's application, finding that the effective date of the transfer was more than one year before the bankruptcy event, and the creditor failed to prove insolvency or fraudulent intent at the time of the disposition.

This appeal concerns an auditor's liability action arising from the Bernard Madoff Ponzi scheme.

The appellants, three Fairfield feeder funds incorporated in the British Virgin Islands, invested in Madoff's company and suffered losses when the fraud was revealed in December 2008.

The funds sued PricewaterhouseCoopers for breach of contract and negligence in auditing their financial statements for 2006 and 2007, claiming damages of approximately $2.5 billion.

The motion judge granted summary judgment dismissing the action on the basis that no damages were suffered, applying the Livent damages methodology.

The appellants appealed on five grounds, all involving findings of fact or mixed fact and law regarding the calculation of damages.

The Court of Appeal dismissed the appeal, finding no palpable and overriding errors in the motion judge's analysis.

The Applicant sought to change a spousal support order and reduce costs enforceable as support, citing bankruptcy and the time-limited nature of the support.

The Respondent sought to strike the Applicant's motion, obtain security for costs, and lift a stay on her cross-appeal.

The court dismissed the Respondent's motion to strike the Applicant's pleadings, her request for security for costs, and her request to lift the stay of her cross-appeal.

The court granted summary judgment dismissing the Applicant's claim to reduce costs enforceable as support and dismissed the Applicant's request for an interim stay of the support and costs orders.

The court declined to make an interim determination on the termination of ongoing spousal support, leaving it for the main motion to change.

This costs endorsement followed a discharge motion for an interim receiver.

The Interim Receiver and Fasken, Martineau DuMoulin LLP sought substantial indemnity costs against Nyaz Jethwani, who had opposed the discharge and fee approvals.

The court found Jethwani was not a public interest litigant and was responsible for costs incurred due to his opposition.

However, the offers to settle did not meet Rule 49 requirements, and Jethwani's conduct, while causing unnecessary costs, was not reprehensible enough for substantial indemnity.

The court awarded partial indemnity costs to the Interim Receiver ($75,000) and Faskens ($54,000), plus $2,500 each for the costs motion itself.

The appellants appealed from an order dismissing their motion to strike claims for usurious interest and unlawful commissions in actions brought by the trustee in bankruptcy of the promoters of an alleged Ponzi scheme.

The appellants argued the order was final because it determined a question of law regarding whether the claims were statute-barred under the Limitations Act, 2002.

The Court of Appeal held that the order was interlocutory, not final, and therefore the court lacked jurisdiction to hear the appeal.

The court found that the motion judge did not formally invoke the applicable rule for determining questions of law, the formal order simply dismissed the motion without making a binding determination, and the motion was premature as pleadings had not closed.

Motions for leave to appeal from an order of the Superior Court of Justice dismissing a motion to require Algoma to resume payments under a Cargo Handling Agreement in the context of CCAA proceedings.

The applicants sought to invoke section 11.01(a) of the Companies' Creditors Arrangement Act to compel payment for post-filing services.

The motion judge had dismissed the motion three times on the same legal grounds.

The Court of Appeal dismissed the leave motions, finding no prima facie merit due to issue estoppel and no significance to the practice, as the issues were specific to the unique agreements underlying the Port Transaction.

The applicant, U.S. Steel Canada Inc., sought an extension of the stay of proceedings under the Companies’ Creditors Arrangement Act (CCAA) to July 28, 2016.

United States Steel Corporation (USS) opposed, seeking a shorter extension and the imposition of conditions for disclosure of Phase II bids and an updated liquidation analysis.

The court granted the extension as requested by the applicant, finding that the applicant acted in good faith and with due diligence, and that a longer stay furthered the prospect of a successful restructuring.

The court denied USS's requests for a shorter extension and conditions, deeming them premature and potentially detrimental to the restructuring process, and found insufficient evidence of value destruction.

Nortel Networks Corporation and its Canadian debtor affiliates brought a summary judgment motion to dismiss claims by SNMP Research International, Inc. and SNMP Research Inc. for breach of contract, breach of confidence, and copyright infringement.

SNMP's claims arose from Nortel's post-CCAA filing sales of its business segments (LOBs), during which SNMP's proprietary software source code was allegedly transferred to purchasers without authorization.

The court dismissed SNMP's claim for disgorgement of Nortel's profits, finding no evidence that Nortel received revenue derived from the copyright infringement, as purchasers knew they were not acquiring rights to SNMP software and negotiated separate licenses.

However, the court held SNMP's damage claim in abeyance for six months, acknowledging ongoing discovery in a related U.S. proceeding and the possibility of future evidence regarding LOB purchasers' use of unlicensed SNMP software.

Following an earlier order expunging a creditor’s claim in bankruptcy, the bankrupt sought costs against the creditor.

The court held that costs should follow the cause and found no reason to depart from that principle.

The court allowed the bankrupt’s claimed disbursements for transcripts, copying, commissioners’ fees, and travel, as well as legal fees incurred from prior counsel in connection with the expungement motion.

The creditor was ordered to pay the total amount of the claimed costs.

A hog supplier sought an order terminating the 30‑day period for an insolvent company to file a proposal under s. 50.4(11) of the Bankruptcy and Insolvency Act or, alternatively, the appointment of a receiver over the debtor’s inventory under s. 101 of the Courts of Justice Act.

The moving party argued the debtor acted in bad faith by accepting livestock deliveries shortly before filing a notice of intention to make a proposal and that creditors would be prejudiced because farmers would otherwise be unable to claim the statutory priority for agricultural suppliers under BIA s. 81.2.

The court held the evidence did not establish lack of good faith, inability to make a viable proposal, inability to obtain creditor approval, or material prejudice to creditors as a whole.

The court further held it would be inappropriate to appoint a receiver solely to trigger the statutory farmer priority scheme where Parliament had chosen not to extend that priority to NOI proceedings.