B. Arnold

The applicant, Dundee Oil & Gas Limited, sought approval for the sale of substantially all its assets and the assignment of associated executory contracts under s. 11.3 of the CCAA.

The court initially adjourned the matter to require further evidence regarding the purchaser's financial stability and ability to manage environmental remediation obligations.

After reviewing supplementary evidence, including cash flow forecasts and the purchaser's operational plans, the court was satisfied that the purchaser would be able to perform the obligations.

The court approved the transaction and the assignment of the contracts.

The plaintiff, a former President of the defendant company, brought an action for wrongful dismissal and oppression, claiming a 15% equity interest.

The plaintiff brought a motion to compel the defendants to produce a further and better affidavit of documents, specifically seeking financial and operational records.

The defendants brought a cross-motion for divided disclosure, arguing that the threshold issue of oppression should be determined before the consequential issue of valuation, and that producing the documents to the plaintiff (now working for a competitor) would cause serious prejudice.

The Master dismissed the defendants' cross-motion, finding that the issues were not clearly severable and that the defendants failed to demonstrate serious prejudice.

The Master ordered the production of most of the disputed documents, subject to a confidentiality order.

The estate of a former CEO brought an oppression action under s. 248 of the Ontario Business Corporations Act seeking recovery of a $750,000 loan advanced to finance a corporate break fee.

The loan was structured through a related entity and contained provisions stating that proceeds from certain Irish transactions could be used, at the lender’s discretion, to repay the loan.

After the corporation received nearly $1 million from three of the four transactions, the directors and CFO used the funds for payroll, operating expenses, tax arrears, and to repay their own loans rather than repaying the lender.

The court held the lender had a reasonable expectation that proceeds from the Irish deals would be applied to the loan principal.

While some expenditures were made in good faith to keep the company operating, the repayment of insiders and a later lender constituted conduct that unfairly disregarded the lender’s interests.

Personal monetary orders were made against certain directors and the CFO.