Bankruptcy and Insolvency Law

The respondent brought a motion seeking an order to deem 100% of a previous costs award, arising from an eight-day trial, as a debt related to child support, thereby making it non-dischargeable in the applicant's bankruptcy under section 178(1)(c) of the Bankruptcy and Insolvency Act.

The applicant contended that the costs primarily stemmed from custody and access issues and should be discharged.

The court, relying on its independent recollection of the original trial, found that the child support issue was inextricably linked to the shared custody claim.

Consequently, the court apportioned 50% of the original costs award to child support, declaring that portion to be a non-dischargeable debt.

The Creditor sought payment of $19,293.49 from the Debtor, comprising a lump sum payment ordered in prior matrimonial litigation and alleged spousal support arrears.

The lump sum payment was a condition precedent for the relinquishment of spousal support claims, but it was not made.

The court found that the Creditor's right to claim spousal support survived due to the unfulfilled condition.

However, the court dismissed the application for the specific spousal support amount, stating that entitlement and quantum needed to be established in Unified Family Court.

The Debtor was ordered to pay $7,817.49 on account of the original lump sum.

The applicants in a CCAA proceeding sought an order extending the stay period to September 30, 2017, which was unopposed by the Monitor and other stakeholders.

The court granted the extension, finding that the circumstances made it appropriate and that the applicants acted in good faith and with due diligence.

Additionally, the court addressed the disclosure of DIP Loan and Term Loan participant information, approving the Monitor's proposed confidentiality arrangements as a first step, and directing the documentation to be filed under seal.

The applicants (Algoma) sought two declarations: (i) that amounts owing under a promissory note from Portco to Algoma had been set off against amounts Algoma owed to Portco under a Cargo Handling Agreement; and (ii) that Algoma's right to terminate related Port Agreements was not subject to Portco's payment of the GIP Loan, which was tied to the set-off amounts.

The court granted the first declaration, finding that equitable set-off applied given the close connection between the parties and transactions, and the manifest inequity of requiring Algoma to pay Portco while the parent company (EGFL) failed to pay the promissory note.

However, the court denied the second declaration, holding that it would contradict a prior oppression judgment and an assignment agreement which explicitly required the GIP Loan to be paid in full in cash before Algoma could terminate the Port Agreements.

The Trustee of WF Canada Ltd. applied under s. 96 of the Bankruptcy and Insolvency Act (BIA) to recover $411,000 from Rocky Racca and Jessica Agostino, alleging transfers at undervalue.

The application proceeded as a trial of an issue.

The court found that Racca received $389,000 in transfers at undervalue from WF Canada Ltd. after Liquid Capital became a creditor, and ordered him to repay this amount to the estate.

The court dismissed the application against Agostino, finding she was neither a party nor privy to the transfers, as she was not involved in the loans or the operation of the joint account into which the funds were deposited, and received no benefit.

The City of Sault Ste.

Marie moved for immediate payment of Essar Steel Algoma Inc.'s outstanding and future post-filing property tax obligations, totaling approximately $10.8 million post-filing.

The court considered Algoma's precarious financial position, volatility of steel prices, and upcoming capital expenditures, including a significant blast furnace stove replacement.

While dismissing the City's motion for immediate payment of arrears, the court ordered Algoma to pay $350,000 per month for ongoing property taxes, acknowledging the City's difficulties and Algoma's assessment appeal.

The Foreign Representative of Urbancorp Inc. (UCI) moved to set aside the Monitor's disallowance of UCI's $6 million promissory note claim against Bay LP and sought a declaration confirming the validity of a companion $2 million note.

The notes were issued in connection with management fees and replaced an earlier $8 million note.

The court found that the notes were not independent obligations but were issued for tax purposes, and the underlying management fees had been paid through intercompany accounting entries.

The court rejected the argument that UCI was a holder in due course, noting that the notes were not intended to be binding and the assignees (UCI and Realtyco), controlled by the same individual, had actual notice of the intercompany affairs and payment status.

The motions were dismissed.

The plaintiff, Trade Capital Finance Corp., obtained a Mareva injunction over the assets of certain defendants, including The Cash House Inc. (TCHI), in a fraud action.

Maple Trust Company, a non-party, had obtained writs of seizure and sale against TCHI for unrelated costs awards.

Maple Trust moved to vary the Mareva injunction to permit it to seize funds from one of TCHI's bank accounts.

The court granted the motion, holding that a Mareva injunction is not proprietary in nature and does not give the plaintiff priority over other bona fide creditors enforcing legal process.

The injunction merely restrains the defendant from disposing of assets, not preventing lawful seizure by other creditors.

The Superintendent of Financial Services initiated proceedings leading to the appointment of Grant Thornton Limited as trustee for several trustee corporations holding syndicated mortgage investments.

The trustee brought a motion seeking the appointment of KSV Kofman Inc. as receiver for six insolvent entities, an order for Mr. Davies to deliver documents, an injunction against Mr. Dennis Jewitt from communicating with investors (except for one project), approval of trustee fees, and costs against Mr. Jewitt.

The court granted the receiver appointment, the document delivery order, and awarded costs of $10,000 against Mr. Jewitt for vexatious conduct.

The request for an injunction against Mr. Jewitt was denied at this stage, with the court noting it could be revisited if his conduct continued to cause concrete impacts.

The applicant, Nicole Jean St. Dennis, sought a declaration that her student loan debt from her first period of post-secondary study was discharged by her assignment in bankruptcy.

The case required an interpretation of s. 178(1)(g)(ii) of the Bankruptcy and Insolvency Act, specifically determining when an individual "ceased to be a full- or part-time student" for the purpose of the seven-year delay period for student loan discharge.

The applicant advocated for a "multiple date approach" where the seven-year period runs from the cessation of studies related to the specific loan.

The respondent argued for a "single date approach" where the period runs from the last date of any studies.

The court adopted the multiple date approach, finding that the applicant ceased to be a student for the purposes of her student loans in October 2004, thus meeting the seven-year delay requirement before her December 2011 bankruptcy.

The application was granted, and the student loan debt was discharged.

The defendants brought a motion to dismiss the plaintiff's action as a nullity and an abuse of process.

The plaintiff had commenced the action while an undischarged bankrupt, lacking the legal capacity to do so.

The court, relying on section 71 of the Bankruptcy and Insolvency Act and Rule 21.01(3)(b) and (d) of the Rules of Civil Procedure, found that the action was a nullity and an abuse of process.

The motion was granted, dismissing the action, and the plaintiff was ordered to pay partial indemnity costs to the defendants, considering the serious nature of the allegations and the plaintiff's rejection of settlement offers.

The Attorney General of Ontario (AGO) objected to fee requests from Emmanuel Village Residence Inc. (EVR) and its counsel, and BDO Canada Inc. (the Receiver) and its counsel, for work performed in a receivership and forfeiture proceeding.

The AGO argued that an administration charge should cap fees, that section 5 of the Civil Remedies Act, 2001 (CRA) applied requiring proof of no other funding source, and that hourly rates were too high.

The court dismissed the AGO's objections, finding that the administration charge was not a cap, section 5 of the CRA did not apply, and the hourly rates were reasonable and previously approved.

The court approved the fees and disbursements, emphasizing the complexity caused by the joinder of receivership and forfeiture proceedings.

Payless Holdings LLC, as foreign representative for itself and other Chapter 11 Debtors, applied for recognition of its U.S. Chapter 11 proceedings as foreign main proceedings under the CCAA in Canada.

The application also sought recognition of certain First Day Orders and a stay of proceedings.

The court granted the Initial Recognition Order, finding the U.S. proceedings to be foreign main proceedings based on the integrated operations and U.S. center of main interest for the Canadian entities.

Certain stay provisions were also granted, with remaining issues adjourned.

The applicant sought recognition of various interim orders, including an Interim DIP ABL Order, in a cross-border insolvency proceeding under the CCAA.

The court granted most of the requested relief but declined to recognize the Interim DIP ABL Order and the associated DIP ABL Lenders’ Charge.

The refusal was based on the lack of adequate protection for Canadian landlords, who would be detrimentally affected by the Canadian entities guaranteeing and collateralizing the DIP facility without receiving comparable security or the benefit of marshalling, unlike other creditor groups.

The applicant, U.S. Steel Canada Inc. (USSC), sought multiple orders under the Companies’ Creditors Arrangement Act (CCAA) to facilitate a proposed plan of arrangement and compromise.

The motions included approval of a supplementary claims process for previously excluded claims, authorization to convene creditor meetings and approve creditor classification for voting on the Plan, approval of amendments to the CCAA Acquisition and Plan Sponsor Agreement and a Support Agreement, and an extension of the stay of proceedings.

The Plan contemplated the acquisition of USSC's operating business by Bedrock Industries Canada LLC.

The motions were largely unopposed and supported by key stakeholders, including the Province of Ontario, United States Steel Corporation, and the Monitor.

The court granted all requested orders, finding the claims process fair, the Plan not doomed to failure, the creditor classification appropriate, and the agreements and stay extension necessary for the restructuring.

This appeal concerned the interpretation of s. 178(1)(a.1)(i) of the Bankruptcy and Insolvency Act, specifically whether a debt arising from intentionally inflicted harm, including psychological harm, should be released upon bankruptcy.

The Registrar had found that the societal interest in releasing this debt was outweighed by the benefit of not releasing it, aligning with the purpose of the BIA to provide a fresh start to an honest but hapless debtor, not to release judgments for intentional harm.

The court agreed with the Registrar's reasoning and dismissed the appeal.

This endorsement clarifies that the presiding judge is not seized of the plaintiff's intended motion to pursue personal causes of action, following a successful partial summary judgment motion and subsequent appeal.

The judge explains that his previous decision was final and that he has since been assigned to the Criminal division.

The parties are advised to obtain a new hearing date for the motion from the Civil Practice Court (CPC) or pursue the Fraudulent Conveyances Act claim through the bankruptcy court.

The applicant creditors sought to continue an application for a bankruptcy order against the debtor, The Quiet Voice Productions Inc., after abandoning a partially argued motion.

The debtor had filed a Notice of Intention to Make a Proposal.

The court declined to hear the bankruptcy application immediately due to time limitations and the applicants' failure to allow previously ordered cross-examinations on affidavits.

The court issued orders to manage the proceedings, including directions for the proposal vote, future hearings for the bankruptcy application or proposal approval, and completion of cross-examinations, while also freezing the debtor's funds.

The Proposal Trustee sought court approval for the proposals of Wasaya Airways Leasing Ltd. (WALL) and the joint proposal of Wasaya Airways Limited Partnership (WALP) and Wasaya General Partner Limited (WGPL).

The court considered the appropriateness of a joint proposal for related corporations under the Bankruptcy and Insolvency Act (BIA), noting the lack of specific BIA provisions but relying on prior judicial interpretations.

The proposals, which offered unsecured creditors a better outcome than bankruptcy, were overwhelmingly approved by creditors.

The court found the proposals reasonable, beneficial to creditors, and made in good faith, also acknowledging the public interest in the debtors' essential services to remote First Nations communities.

Emmanuel Village Residence Inc. (EVR) brought a motion to increase an administration charge in a receivership proceeding, which had been consolidated with a forfeiture application by the Attorney General of Ontario (AGO) under the Civil Remedies Act.

The AGO opposed the increase and the continuation of a sealing order.

The court granted EVR's motion, increasing the administration charge from $350,000 to $700,000, finding that it would be "clearly not in the interests of justice" to deny payment to the professionals facilitating the sale of the property.

The court also granted the continuation of the sealing order until the property is sold.