Brett Gavin Harrison

The Nortel group of companies filed for insolvency protection across multiple jurisdictions.

Following the sale of Nortel's assets, approximately $7.3 billion was placed in escrow.

The trial judge ordered that these lockbox funds be allocated on a pro rata basis among the various debtor estates, finding that Nortel operated as a highly integrated multinational enterprise and that the master research and development agreement did not govern allocation upon insolvency.

Several parties sought leave to appeal under the Companies' Creditors Arrangement Act.

The Court of Appeal denied leave, finding that the proposed appeals were not prima facie meritorious, did not raise issues of significance to the practice, and would unduly hinder the progress of the proceedings.

The applicant, GuestLogix Inc., sought an initial order under the Companies' Creditors Arrangement Act (CCAA) for a stay of proceedings, the appointment of a Monitor, and authorization for super-priority charges.

The court found the applicant to be an insolvent debtor company with over $5 million in unsecured liabilities, making it eligible for CCAA protection.

The court granted the stay and the requested Administration and Directors' Charges.

However, due to a potential conflict of interest raised by a secured creditor, the court declined to appoint the proposed Monitor, Deloitte Restructuring Inc., and instead appointed PricewaterhouseCoopers Inc.

A court-appointed receiver sought an order compelling several service providers to remit commissions allegedly owed under license agreements following the receivership of a home services business formerly operating under a national retailer’s brand.

The respondents argued the receiver had repudiated the license agreements by shutting down the system that generated service leads and announcing it would not continue operations, thereby relieving them of contractual obligations.

The court held that the receiver’s conduct constituted repudiation of the agreements, which the respondents accepted.

As a result, the receiver could not enforce contractual payment obligations.

Claims based on unjust enrichment and quantum meruit were also rejected, particularly given the inequitable circumstances created by the receiver’s actions and the continued enforcement of stay provisions against the respondents.

The appellants, holding unsecured crossover bonds, appealed a CCAA judge's decision that the common law 'interest stops' rule applies in CCAA proceedings, preventing them from claiming post-filing interest above their principal debt and pre-petition interest.

The Court of Appeal dismissed the appeal, confirming that the 'interest stops' rule is a fundamental tenet of insolvency law that applies to CCAA proceedings to ensure fair treatment of creditors and orderly administration.

The Court clarified that while creditors cannot legally claim post-filing interest, the rule does not preclude a negotiated CCAA plan from providing for such payments.

A bankruptcy trustee brought a motion under s. 163(1) of the Bankruptcy and Insolvency Act seeking to compel former directors and an officer of the bankrupt entities to attend examinations under oath and produce documents concerning the bankrupts’ affairs.

The respondents argued that because the trustee had already commenced a civil action relating to a dividend transaction, the trustee could not rely on the statutory examination power absent exceptional circumstances and should instead obtain information through discovery in the action.

The court held that the trustee’s statutory examination powers are broad and are not limited to exceptional circumstances where litigation has commenced.

The court found the examinations were necessary for the proper administration of the bankrupt estate and not merely a step in the civil action.

The respondents were ordered to attend examinations and produce documents, with portions relevant to the civil action to count as discoveries to avoid duplication.

In a joint cross-border insolvency trial concerning the allocation of approximately $7.3 billion in lockbox funds from the sale of global business lines and residual intellectual property, the court interpreted the Master R&D Agreement as an operating transfer-pricing document that granted limited licence rights but did not govern post-insolvency allocation.

The court rejected both the position that one Canadian debtor owned all sale proceeds by virtue of legal title and the position that the EMEA debtors jointly owned all intellectual property by operation of law.

Applying unjust enrichment principles and the broad remedial jurisdiction available in CCAA proceedings, the court held that a just result required a pro rata allocation among debtor estates based on allowed claims.

The court further directed that duplicate claims be counted only once for allocation purposes, that intercompany claims be included, and that interim distribution proposals be brought forward.

The appellants advanced funds to Cash Store, a payday lending company operating under CCAA protection.

They appealed a motion judge's dismissal of their claim that they were the sole legal and beneficial owners of loan payments and accounts receivable from Cash Store's customers.

The motion judge found that the actual practices of the parties, including the payment of interest and commingling of funds, reflected a debtor-creditor relationship rather than the principal-broker relationship set out in their agreements.

The Court of Appeal dismissed the appeal, finding no error in the motion judge's factual determinations.

In CCAA proceedings arising from the liquidation of a multinational telecommunications company, bondholders claimed entitlement to post‑filing interest exceeding US$1.6 billion in addition to principal and pre‑filing interest of approximately US$4.092 billion.

The court considered whether the common law "interest stops rule" applies in CCAA proceedings, particularly in a liquidating CCAA context.

Applying insolvency principles of pari passu distribution and relying on Supreme Court guidance emphasizing the integrated nature of the CCAA and BIA regimes, the court held that post‑filing interest does not accrue against the insolvent estate.

The court rejected arguments that contractual entitlement to interest survives the filing or that distributions require a negotiated plan recognizing such interest.

Accordingly, crossover bondholders were limited to principal and pre‑petition interest claims.

In long‑running insolvency proceedings under the Companies' Creditors Arrangement Act, the court was asked to determine whether unsecured bondholders were entitled to claim post‑filing interest on crossover bonds after the debtor companies entered CCAA protection.

The court considered the common law “interest stops” rule, the pari passu principle governing distribution to unsecured creditors, and the relationship between the CCAA and the Bankruptcy and Insolvency Act.

The court held that the interest stops rule applies in CCAA proceedings and prevents unsecured creditors from claiming post‑filing interest absent a negotiated plan providing for such payments.

Allowing interest to accrue for some creditors during the stay period would undermine the status quo and distort equality among creditors.

The court further held it had jurisdiction to determine the issue even without a proposed plan of arrangement.

Third party lenders sought declarations in CCAA proceedings that funds, brokered payday loans, and receivables advanced through the debtor company were their property and not assets of the debtor estate.

The court examined the written broker agreements and the parties’ actual practices, including commingling of funds, guaranteed returns to lenders, and capital protection arrangements that insulated lenders from loan losses.

The evidence showed the lenders received fixed 17.5% returns irrespective of customer loan performance and that all loan proceeds and repayments flowed through the debtor’s general accounts.

The court held that the parties’ conduct varied the broker agreements and created a debtor–creditor relationship rather than a trust or agency relationship.

The lenders’ motions for declarations of ownership were dismissed and the disputed receipts were held to belong beneficially to the debtor.

A corporation sought court approval of a statutory plan of arrangement under s. 182 of the Business Corporations Act involving the acquisition of its shares by another mining corporation through an exchange of securities.

The court applied the framework established in BCE Inc. v. 1976 Debentureholders, requiring satisfaction of statutory procedures, good faith, and that the arrangement be fair and reasonable.

The court found the statutory requirements met, the transaction negotiated at arm’s length and recommended by the board, and the arrangement supported by an overwhelming shareholder vote with no dissent.

The court also addressed the evidentiary role of fairness opinions in M&A transactions, holding that such opinions may support good faith and fairness even if not tendered as expert evidence.

Approval of the arrangement was granted.

The Applicants, operating a network of alternative financial services branches across Canada, sought initial protection under the Companies' Creditors Arrangement Act (CCAA) due to a severe liquidity crisis and regulatory challenges.

The court found the Applicants to be insolvent and granted a stay of proceedings to provide breathing space for restructuring.

The court confirmed its jurisdiction to hear the matter in Ontario, as the Applicants' chief place of business is located there.

However, the court deferred the request for a DIP financing charge to allow other stakeholders time to respond.

A motion sought to transfer a proceeding involving equity derivative transactions between two financial institutions to the Toronto Region Commercial List under the “basket clause” of the Commercial List Practice Direction.

The dispute concerned the interpretation and adjustment of settlement mechanisms under ISDA confirmations following a corporate restructuring affecting securities in the derivative basket.

The court reviewed the principles governing transfer to the Commercial List, including whether the matter is in essence commercial, its complexity, the number of parties, and considerations of efficient case management.

The court held that disputes involving the interpretation or performance of complex derivative transactions fall within the type of commercial matters commonly heard on the Commercial List.

The motion to transfer was granted and the parties were directed to attend a subsequent appointment to schedule the proceeding.

The appellant sought to enforce a letter of request from a U.S. court to obtain documents and viva voce testimony from the respondent, a federal Crown corporation, for use in a U.S. action.

The application judge dismissed the application, finding the respondent enjoyed Crown immunity and the appellant failed to meet the criteria for enforcing letters rogatory.

The Court of Appeal allowed the appeal, holding that section 60 of the Ontario Evidence Act is a rule of practice and procedure that binds the Crown under section 27 of the Crown Liability and Proceedings Act.

The Court further held the application judge erred by treating the factors for enforcing letters rogatory as strict pre-conditions and by concluding that alternative disclosure under the Access to Information Act provided evidence of the same value.

The plaintiff moved for leave to amend its statement of claim to add a new defendant and several new causes of action arising from the termination of a lease involving advertising space on a building wall.

The proposed amendments included claims for wrongful interference with economic relations, conspiracy, unjust enrichment, breach of trust, rectification, and recovery of rents.

The court held that most of the proposed claims were statute‑barred under the two‑year limitation period in the Limitations Act, 2002 and rejected the plaintiff’s argument that the ten‑year limitation period in the Real Property Limitations Act applied merely because the dispute involved a lease of real property.

However, the court allowed a limited amendment adding the proposed defendant for a claim relating to alleged non‑payment of rent for November and December 2006, finding a genuine issue as to whether the RPLA applied to that specific claim.

Following the dismissal of its application for the enforcement of letters rogatory, the applicant argued that no costs should be awarded because the application raised novel issues of law.

The court rejected this argument, finding that the applicant was a commercial entity pursuing its own private interests in foreign litigation, not a public interest litigant.

The court awarded partial indemnity costs to the successful respondent but reduced the quantum claimed from $32,647.71 to $18,189.46, noting that the respondent had already received a substantial costs award on an earlier, nearly identical application.

The applicant, an American pharmaceutical company, sought to enforce amended letters rogatory issued by a United States District Court to compel testimony and documentary evidence from the respondent, a federal Crown corporation, for use in foreign litigation.

The respondent opposed the application, arguing that it enjoyed Crown immunity.

The court held that the presumption of Crown immunity under s. 17 of the federal Interpretation Act prevented the enforcement of letters rogatory against a Crown agent, as the provincial Evidence Act does not bind the federal Crown.

Furthermore, the court found that the applicant failed to satisfy the legal standard for enforcing letters rogatory, as the evidence sought was not necessary for trial and had already been obtained through an Access to Information Act request.

The application was dismissed.

The appellant sold a waterjet machine to a debtor and perfected its purchase money security interest by registering under the PPSA.

Unbeknownst to the appellant, the debtor immediately transferred the machine to a related company.

The related company later obtained financing from the respondent, who registered a security interest against the related company's assets.

The Court of Appeal held that the appellant's security interest remained perfected and took priority under s. 48(2) of the PPSA, as the appellant registered a financing change statement within 30 days of learning of the unauthorized transfer.

The appellant's discharge of a separate, unrelated registration against the related company did not unperfect its original security interest.

The appellants appealed the dismissal of their motion seeking to re-litigate a matter previously dismissed at trial in 2007, which had been upheld by the Court of Appeal and denied leave by the Supreme Court of Canada.

The appellants claimed they were bringing new evidence and a new cause of action for fraudulent misrepresentation.

The Court of Appeal upheld the motion judge's finding that the claims were not different from those previously decided and were barred by res judicata.

The appeal was dismissed with no costs.

In a supplementary endorsement following an oral judgment, the Court of Appeal for Ontario addressed the allocation of proceeds of realization under the respondent bank's debt instruments.

The parties agreed that the proceeds should be allocated first to expenses, second to interest, and third to principal, which the court ordered.

The court declined to consider the balance of the appellants' supplementary submissions as they went beyond the scope of the court's invitation.