Bankruptcy and Insolvency Law

The appellant credit union appealed a Superior Court decision which held that the provincial two-year limitation period did not apply to a trustee's fraudulent preference claim under s. 95 of the Bankruptcy and Insolvency Act due to the doctrine of paramountcy.

The Court of Appeal allowed the appeal, finding no operational conflict or frustration of federal purpose between the provincial Limitations Act and the federal bankruptcy statute.

The court reinstated the Registrar's original order dismissing the trustee's claim as statute-barred.

The appellant appealed an order staying and dismissing his action against the respondents as an abuse of process.

The motion judge found that the appellant's claims were barred by a broad release contained in a Plan of Compromise and Arrangement under the CCAA that restructured the Canadian market for Asset-Backed Commercial Paper (ABCP).

The Court of Appeal upheld the motion judge's decision, agreeing that the release clearly captured the appellant's claims and that it would be unjust to allow his claim to proceed in isolation after he had participated in the CCAA proceedings and voted in favour of the Plan.

The appellant, a secured creditor, appealed an order approving a receiver's proposed purchase agreement and technology license agreement for the assets of the respondent companies.

The appellant argued that the proposal was identical to one previously rejected by another judge.

The Court of Appeal dismissed the appeal, finding that the new proposal differed significantly and that the motion judge appropriately applied the Soundair principles in approving the transaction, given the changed circumstances and the need to sell the subsidiary as a going concern.

The appellant appealed the decision of the Superior Court of Justice revoking his discharge from bankruptcy.

The appeal judge had admitted fresh evidence showing the appellant failed to disclose significant assets, and directed him to file a fresh statement of affairs.

The Court of Appeal upheld the decision, finding the failure to disclose significant assets was a serious omission justifying the revocation.

The respondents' cross-appeal on costs was also dismissed.

The respondent, a former bankrupt, brought a motion to dismiss the appellant's appeal of three costs orders.

The appellant cross-moved for leave to appeal.

The Court of Appeal dismissed the appeal in respect of the first two costs orders, finding they had either been finally disposed of previously or were significantly out of time with no satisfactory explanation for the delay.

The Court granted leave to appeal the third costs order but ordered the appellant to post $75,000 in security for costs within 30 days, failing which the remainder of the appeal would be dismissed.

The appellants appealed an order dismissing their joint venture action against the respondents.

The individual appellant had commenced the action while she was a discharged bankrupt, but the cause of action arose before her bankruptcy and was not disclosed to her trustee.

The motion judge found the claim was a nullity and refused to exercise equitable jurisdiction to regularize the proceeding due to the appellant's failure to disclose the asset.

The Court of Appeal dismissed the appeal, finding no error in the motion judge's refusal to grant equitable relief given the appellant's non-disclosure and the subsequent delay.

The appellant appealed a decision upholding a receivership order, arguing his consent to the order was obtained through fraud or conditioned on a $150,000 advance.

The Court of Appeal dismissed the appeal, finding no basis to interfere with the motion judge's conclusion that there was no evidence of fraud or conditional consent in the material before him.

Indalex Limited, while under CCAA protection, obtained a super-priority charge for DIP financing and subsequently sold its assets.

The sale proceeds were insufficient to cover both the DIP lenders and the deficiencies in Indalex's underfunded pension plans.

The Court of Appeal held that a deemed trust under s. 57(4) of the Pension Benefits Act applied to the pension deficiencies and took priority over the DIP lenders' super-priority charge, as no explicit finding of federal paramountcy had been made.

Furthermore, the Court found that Indalex breached its fiduciary duties as the pension plans' administrator by failing to protect the beneficiaries' interests during the CCAA proceedings, justifying a constructive trust over the reserve fund.

The respondent filed a property claim in bankruptcy for funds it loaned to the bankrupt, alleging the loan was induced by fraud.

The trustee disallowed the claim, but the appeal judge found fraud and imposed a constructive trust over the remaining funds.

The trustee appealed, arguing the appeal judge lacked jurisdiction to determine the fraud allegations and erred in imposing a constructive trust.

The Court of Appeal dismissed the appeal, finding the process was agreed upon and the constructive trust was a just remedy to prevent the bankrupt and its tainted creditors from being unjustly enriched by the fraud.

The appellant appealed an order resolving a priority dispute between two secured creditors of an insolvent corporation.

The dispute involved a circular priority problem created by multiple financing agreements.

The motion judge applied a partial subordination theory, finding that the respondent intended to subordinate its interest only to a third-party lender, not to the appellant.

The Court of Appeal upheld the motion judge's decision, agreeing that partial subordination produced an equitable result and that complete subordination would confer an unintended windfall on the appellant.

The appeal was dismissed.

In a complex CCAA restructuring of Stelco Inc., four appeals were brought regarding the distribution of assets among creditors.

The Court of Appeal upheld the motion judge's findings that Senior Debt Holders could enforce subordination and turnover provisions against Noteholders via trust principles, and that post-filing interest was payable.

However, the Court reversed the motion judge on two key issues: it found that a massive IT outsourcing contract was not in the 'ordinary course of business', thereby elevating its assignee to Senior Debt status, and it ruled that the distributed securities must be valued at the 'Plan value' ($5.50 per share) rather than the post-emergence market value.

The appellant appealed a judgment recognizing and enforcing a United States District Court judgment against him as guarantor.

The sole ground of appeal was that the motion judge erred in refusing to grant a stay of enforcement in Ontario pending the final decision of a New Jersey Bankruptcy Court.

The Court of Appeal dismissed the appeal, noting that the appellant had acknowledged owing millions of dollars, the US judgment was final, and the appellant had lost at every juncture in the collateral bankruptcy proceedings, including being refused a stay pending appeal in that court.

The appellant appealed a decision regarding her bankruptcy discharge, arguing she was entitled to an automatic discharge because the trustee in bankruptcy failed to include a recommendation on her discharge in his report.

The Court of Appeal dismissed the appeal, finding that the appellant had failed to perform several duties and tender required funds, and that the trustee's actions did not invalidate the procedure.

The appellants, who were discharged bankrupts, sought to appeal a declaration validating mortgages on their properties.

The respondent mortgagee brought a motion to quash the appeal on the basis that the appellants lacked standing.

The Court of Appeal allowed the motion to quash, finding that the properties remained vested in the trustee in bankruptcy.

Although the trustee took no position on the appeal and consented to the appellants proceeding, it had not abandoned its interest in the properties under section 40(1) of the Bankruptcy and Insolvency Act.

Following the dismissal of an appeal regarding a receiver's decision to permit a corporation in receivership to plead guilty in an American criminal trial, the respondents sought costs.

The appellants argued no costs should be awarded as the issues were novel and complex.

The Court of Appeal rejected this argument, finding the appeal involved a standard review of a Commercial List judge's discretion.

The Court awarded costs to the respondents on a partial indemnity basis, fixing the amounts at a fair and reasonable level rather than actual costs incurred, payable by Lord Black and Conrad Black Capital Corporation.

The applicant sought leave to appeal an order directing the receiver to file a Payments Report detailing distributions made by the insolvent companies.

The applicant argued the report could prejudice his ongoing criminal proceedings in the United States.

The Court of Appeal dismissed the motion for leave to appeal, finding that the receiver's duty is to the economic interests of the estate's stakeholders, not to protect a stakeholder's personal interest in avoiding prejudice in foreign criminal proceedings.

The proposed appeal was found to lack prima facie merit.

The appellant filed for bankruptcy shortly before the scheduled peremptory appeal hearing.

The appellant's counsel was unable to obtain instructions from the trustee in bankruptcy regarding whether to proceed with the appeal.

Consequently, the Court of Appeal deemed the appeal abandoned, ordered the release of funds held in court to the respondent, and awarded costs to the respondent.

The appellant father appealed an order granting retroactive child support and summary judgment enforcing a $24,000 equalization payment under a separation agreement.

The father argued his bankruptcy discharge released him from the equalization payment.

The Court of Appeal upheld the retroactive child support award, finding the father engaged in blameworthy conduct by failing to disclose significant income increases.

However, the Court set aside the summary judgment regarding the equalization payment, finding a triable issue existed as to whether the payment was actually in the nature of support, which would survive bankruptcy under s. 178(1) of the Bankruptcy and Insolvency Act.

The appellant made an assignment in bankruptcy in 1994 and was discharged in 1996.

Years later, the trustee in bankruptcy learned the appellant may have failed to disclose an interest in real property and obtained an order reappointing the trustee.

On appeal, the Court of Appeal held that the bankruptcy judge erred by deciding the matter in a summary proceeding given the conflicting evidence and credibility issues.

The appeal was allowed and a trial of an issue was ordered to properly determine the ownership of the property.

The appellant appealed an order finding that a judgment debt against the bankrupt did not survive his discharge from bankruptcy.

The Court of Appeal dismissed the appeal, agreeing with the motion judge that the bankrupt was released from the judgment debt pursuant to s. 178(1)(d) of the Bankruptcy and Insolvency Act.