Bankruptcy and Insolvency Law

The court-appointed receiver brought a motion to approve its Fourth Report, its fees and disbursements, and to amend the Receivership Order to increase the receiver's charge from $300,000 to $700,000.

The secured creditor supported the motion, and the respondent opposed it but made no submissions.

The court granted the motion, noting that the receiver's costs had increased significantly due to the respondent's opposition to a previous sale and approval motion.

The plaintiff, a creditor of the defendant's bankrupt former spouse, brought a motion to set aside the bankrupt's release of his interest in the matrimonial home.

The bankrupt had released his interest in the home to the defendant in a separation agreement shortly before declaring bankruptcy.

The court held that the bankrupt's right to claim possession of the matrimonial home was personal in nature and not an asset available for distribution to creditors under the Bankruptcy and Insolvency Act.

The motion was dismissed.

The plaintiff brought a motion for summary judgment against his former real estate solicitor for professional negligence, alleging the solicitor failed to properly advise him regarding a $300,000 gift direction.

The plaintiff also moved to dismiss a counterclaim brought by one of the defendants on the basis that she was an undischarged bankrupt.

The court dismissed the summary judgment motion, finding that genuine issues of credibility and the factual context of the transaction required a trial.

However, the court granted the motion to dismiss the counterclaim, concluding that the defendant lacked the legal capacity to commence the action as an undischarged bankrupt, and the proceeds claimed did not constitute after-acquired property.

The plaintiffs moved to bar a claim filed by Trendi Dezign Incorporated in the bankruptcy of the Kaptor Group, arguing it was released under a prior Settlement Agreement.

The court found that Trendi was a 'related person' to the settling defendants under both the Bankruptcy and Insolvency Act and the Business Corporations Act, and was therefore bound by the broad release.

The defendant's cross-motion to examine the receiver was dismissed as a fishing expedition not for the general benefit of creditors.

The defendants brought a motion to strike the plaintiff bankruptcy trustee's claims for the return of usurious interest and unlawful commissions paid as part of a Ponzi scheme.

The defendants argued the claims were statute-barred and that breach of statute is not a valid civil cause of action.

The court dismissed the motion, finding that the limitation period did not begin to run until the trustee completed its investigation into the complex fraud.

The court also granted the plaintiff's cross-motion to amend the pleadings to explicitly frame the claims in unjust enrichment.

The defendants brought a motion to strike the plaintiff bankruptcy trustee's claims for the recovery of usurious interest and unlawful commissions paid as part of a Ponzi scheme.

The defendants argued the claims were statute-barred and failed to disclose a reasonable cause of action.

The plaintiff brought a cross-motion to amend the statements of claim to explicitly plead unjust enrichment.

The court dismissed the motion to strike, finding that the limitation period did not begin to run until the trustee discovered the fraudulent nature of the scheme, and that unjust enrichment was a valid cause of action.

The court granted the plaintiff's cross-motion to amend the pleadings, as the amendments would not cause non-compensable prejudice to the defendants.

In the CCAA proceedings of U.S. Steel Canada Inc., its parent company, United States Steel Corporation, sought approval of several proofs of claim totaling over $2 billion.

Various stakeholders objected, arguing that the intercompany loans should be re-characterized as 'equity claims' under the CCAA and that the security granted for certain advances was void as a fraudulent preference or unenforceable for lack of consideration.

The court rejected the objections, finding that the parent company had a reasonable expectation of repayment when the advances were made, and that the security was validly granted for fresh consideration and did not constitute a fraudulent preference.

The claims were confirmed as debt claims.

In a CCAA restructuring proceeding, the moving parties (Cliffs) brought a motion objecting to the jurisdiction of the Ontario Superior Court to hear a dispute over a terminated iron ore supply contract.

Cliffs argued that the contract was governed by Ohio law and that Ohio was the convenient forum.

The court dismissed the motion, finding that it had jurisdiction simpliciter because the contract was made in Ontario and Cliffs carried on business in Ontario.

Applying the single control model for insolvencies, the court held that the dispute should be resolved within the CCAA proceedings.

The court also found that Cliffs failed to establish that Ohio was clearly a more appropriate forum.

The plaintiff, a Canadian distributor, brought an action against the defendants following the repudiation of a distribution agreement during US Chapter 11 bankruptcy proceedings.

The defendants obtained a temporary restraining order from the US Bankruptcy Court enjoining the Canadian action.

The plaintiff then brought a motion in Ontario seeking to enforce an alleged undertaking made by the defendants to the US court to bring a motion to stay the Canadian action.

The Ontario Superior Court of Justice dismissed the motion, finding it premature and noting that the US court had already considered the issue and was the appropriate forum to determine its own jurisdiction, emphasizing principles of comity in cross-border insolvencies.

The applicants, a group of integrated telecommunications companies operating in Canada and the US, sought an initial order under the CCAA.

Facing declining revenues and defaults on secured credit agreements, the companies required protection to implement a pre-filing sales process.

The court granted the initial order, finding the applicants were insolvent debtor companies.

The court also approved an Administration Charge of $1 million, a Directors' and Officers' Charge of $3.1 million, and authorized FTI Consulting Canada Inc. to act as the foreign representative to seek recognition of the proceedings in the United States under Chapter 15 of the Bankruptcy Code.

In the context of a receivership, representative counsel for the investors of Redstone Capital Corporation brought a motion for leave to deliver a new affidavit in an ongoing substantive consolidation hearing.

The hearing had already commenced and was adjourned pending this motion.

The court applied the test under Rule 39.02(2) of the Rules of Civil Procedure and found that the proposed evidence, which detailed an individual investor's motivation for investing, was not relevant to the test for substantive consolidation.

The motion for leave was dismissed.

The defendants brought a motion for summary judgment seeking to dismiss the plaintiffs' claim for rent arrears and for judgment on their counterclaim for rescission of a franchise agreement.

One of the defendants made an assignment in bankruptcy before the statement of defence and counterclaim was issued.

The court found that the counterclaim vested in the trustee in bankruptcy under section 71 of the Bankruptcy and Insolvency Act, rendering the statement of defence and counterclaim a nullity.

The court declined to cure the nullity, noting the bankrupt defendant had intentionally destroyed business records.

The motion for summary judgment was dismissed.

The plaintiff, an unpaid trade creditor on a townhouse development project, brought an action against the director of the corporate owner for breach of trust under the Construction Lien Act.

The corporate owner had sold all units but failed to pay the plaintiff in full, and the director subsequently declared personal bankruptcy.

The court dismissed the action, finding that the corporate owner was not a 'contractor' under section 8 of the Act, and therefore no trust funds existed.

Consequently, the director could not be held personally liable under section 13, and there was no evidence of dishonesty to prevent the release of claims through his bankruptcy discharge.

The court-appointed Trustee of an insolvent condominium development brought a motion for advice and directions, seeking permission to terminate pre-sale purchase agreements for buyers who had purchased two parking units, due to a shortage of parking spaces in the building.

The Trustee proposed that these buyers relinquish one parking space for a price reduction, or face termination of their agreements.

The court applied the test of balancing the equitable considerations of all stakeholders.

Finding that the mortgagees had accepted the risk of the parking shortage and that the purchasers would suffer significant financial hardship and loss of equity if their agreements were terminated, the court dismissed the Trustee's motion.

The debtors filed Notices of Intention to Make a Proposal under the Bankruptcy and Insolvency Act.

They brought a motion seeking administrative consolidation of their proceedings, approval of DIP financing with a super priority charge, administration and D&O charges, approval of a stalking horse sale process, and an extension of time to file a proposal.

The court granted all the requested relief, finding that the DIP financing and charges were necessary for the debtors to continue operations and that the stalking horse sale process was fair, transparent, and the best alternative to maximize value for stakeholders.

The moving party landlord brought a motion within a receivership proceeding seeking an order for the court-appointed receiver to pay $319,016 in occupation rent for the use of a marina.

The court examined whether the receiver's actions, such as changing locks and keeping assets on site, constituted occupation that deprived the landlord of use.

The court found that the receiver did not occupy the premises in the sense necessary to attract liability, noting that the landlord was given a key, found a new tenant, and insisted that third-party boats remain on site.

The motion was dismissed.

The respondent mother requested an addendum to a costs order to stipulate that the $54,700 costs award is enforceable under the Family Responsibility and Support Arrears Enforcement Act, 1996.

The applicant father opposed the request, arguing that his recent bankruptcy filing extinguished the debt.

The court rejected the father's argument, noting that support debts are not extinguished by bankruptcy and that the costs order related to a trial where spousal and child support were key issues.

The court granted the request, ordering the costs to be treated as a support order enforceable under the Act.

In the context of CCAA proceedings, the moving party sought an order requiring the Monitor to disclose all information and documents it considered when reviewing proofs of claim submitted by another creditor group.

The moving party intended to use this information at a claims hearing to argue that the claims officer should apply the same standard of proof used by the Monitor.

The court dismissed the motion, finding that the roles of the Monitor and the claims officer under the claims procedure order were fundamentally different, and the request constituted an impermissible collateral attack on that order.

Furthermore, the court noted that comparing claims would result in an unnecessary trial within a trial and risk disclosing confidential lending practices.

In the context of CCAA proceedings for U.S. Steel Canada Inc., three former employees brought a motion seeking payment of lump sum retention bonuses under their severance agreements.

The respondent argued the payments were pre-filing obligations subject to the CCAA stay.

The court found the bonuses were compensation for post-filing services, as they were contingent on the employees remaining available to work during the notice period.

The court exercised its discretion to order payment, finding it fair and equitable as it would not create an unfair priority over other employees and the amounts were de minimus.

Following a trial where the plaintiffs were successful, the defendant Negravi made an assignment in bankruptcy before costs submissions were completed.

The court held that the proceedings to fix costs were not stayed by s. 69(1) of the Bankruptcy and Insolvency Act, applying the rule from British Gold Fields that costs associated with a pre-bankruptcy judgment for a liquidated sum are added to the sum recovered.

The court awarded the plaintiffs $150,000 in costs against Negravi on a substantial indemnity basis due to his unreasonable conduct and unfounded counterclaim.

Nominal costs were awarded against another defendant, and the plaintiffs were ordered to pay costs to a successful third defendant.