Clifton P. Prophet

The United Steelworkers Local Union 2251, supported by USW Local 2724 and Essar Algoma retirees, brought a motion to qualify a "Subject Bidder" as a Phase II Bidder in a Companies' Creditors Arrangement Act (CCAA) proceeding.

The Subject Bidder had been disqualified by Essar Algoma, its Chief Restructuring Advisor, Financial Advisor, and the Monitor for failing to provide satisfactory evidence of financial capability to consummate a transaction.

The union argued it was not properly consulted in the disqualification decision and that it should have been allowed to meet with the Subject Bidder.

The court dismissed the motion, finding that the union's consultation rights under the Sale and Solicitation Process (SISP) did not extend to decisions on a bidder's financial capability, and that the court should not second-guess the business judgment of the CCAA applicants and their professionals.

The moving party, United Steelworkers Union Local 2251, sought a stay of a CCAA judge's order establishing a summary process with condensed timelines for the resolution of grievance-related claims, pending its motion for leave to appeal.

The union argued the process altered the collective agreement contrary to s. 33 of the CCAA and that it would suffer irreparable harm due to the workload and deadlines.

The Court of Appeal dismissed the motion, finding no serious question to be determined as leave to appeal was unlikely to be granted, no irreparable harm as avenues for assistance existed, and the balance of convenience favoured the applicants' restructuring efforts.

In the context of CCAA restructuring proceedings, the applicants sought approval of a grievance claims procedure to resolve approximately 3,000 outstanding grievances.

USW Local 2251 opposed the motion, arguing that the CCAA stay did not apply to grievances, that imposing a new procedure impermissibly amended the collective agreement, and that staying the grievance process violated section 2(d) of the Charter.

The court granted the motion, holding that the CCAA permits staying grievance procedures and imposing a claims process, which does not constitute an amendment to the collective agreement.

The court also found no Charter violation and held that under the doctrine of paramountcy, the CCAA stay provisions prevail over the grievance arbitration requirements in the provincial Labour Relations Act.

In a commercial receivership, the receiver sought approval of a stalking horse agreement and a court-supervised sales process for substantially all of the debtor companies' marina business assets.

Certain mortgagee creditors objected to the inclusion of two properties on the basis that the allocated purchase price understated fair market value and would not satisfy their registered charges.

The court held that the broader interests of creditors and stakeholders in preserving and selling the business as an operating marina outweighed those concerns at this stage, approved the stalking horse offer and sale process, and deferred any final determination about inclusion of the disputed properties to the ultimate sale approval motion under the applicable sales approval framework.

The court also granted a sealing order over commercially sensitive appendices and approved the receiver's reports and conduct.

The appellant appealed an order declaring that the respondent had priority over any other interest claimed in certain retirement community units, except for valid construction lien claims.

The appellant argued the motion judge erred by determining the priority motion separately from the lien reference and by not giving effect to its security and equity interests.

The Court of Appeal dismissed the appeal, finding that the bifurcation of issues flowed from a previous unappealed court order and that the motion judge's order specifically preserved the construction lien issues.

The appellant, an assignee of a second mortgage, appealed an order on the sole basis that the motion judge erred by refusing to grant an adjournment on the hearing date.

The appellant claimed it had no notice of the hearing and had only retained counsel the day before.

The Court of Appeal dismissed the appeal, holding that the decision to grant or refuse an adjournment is discretionary and entitled to deference, and found no basis to interfere with the motion judge's decision.

Following certification of a pension-related class proceeding, the plaintiff sought partial indemnity costs of over $210,000 for the certification motion.

The defendants conceded entitlement to costs but argued the claimed amount was excessive and opposed joint and several liability.

Applying the principles governing certification motion costs, including those articulated in Pearson v. Inco Ltd., the court determined that the plaintiff’s claimed costs were somewhat excessive and unsupported in part.

The court fixed fair and reasonable partial indemnity costs at $175,000 inclusive of disbursements and taxes.

The defendants were not held jointly and severally liable; instead, four groups of defendants were ordered to each pay an equal share.

The plaintiff sought to certify a class action on behalf of members of the Eastern Canada Car Carriers Pension Plan against the plan's trustees, administrative agent, and actuaries.

The plaintiff alleged that the defendants negligently or in breach of trust granted early retirement benefits when the plan had ongoing solvency issues, leading to a reduction in benefits for plan members.

The court found that the pleadings disclosed causes of action in negligence and breach of trust, the class was identifiable, there were common issues, a class proceeding was the preferable procedure, and the representative plaintiff was suitable.

The motion for certification was granted.

Invesco sought leave to appeal orders sanctioning a Plan of Compromise and Reorganization under the CCAA and approving a settlement that released Ernst & Young LLP from claims arising from its auditing of Sino-Forest Corporation.

The Court of Appeal denied leave, finding that the proposed appeals failed to meet the stringent test for leave in CCAA proceedings.

The appeal of the Sanction Order was moot, and the issues regarding the third-party release in the Settlement Order were governed by the court's prior decision in ATB Financial.

The applicants, comprising iMarketing Solutions Group Inc. and its subsidiaries, applied for protection under the Companies' Creditors Arrangement Act (CCAA) due to severe liquidity challenges.

The court granted an Initial Order, including a stay of proceedings, finding that the applicants' businesses could not survive without immediate protection.

The court also approved debtor-in-possession (DIP) financing of $1.0 million, an Administration Charge of $300,000, a Directors' Charge of $1.3 million, the appointment of a Chief Restructuring Officer, and authorization to pay critical suppliers to ensure the continuation of operations during the restructuring process.

A debtor company sought an initial order under the Companies’ Creditors Arrangement Act to implement a consensual recapitalization transaction supported by major secured creditors.

The motion requested a stay of proceedings, approval of debtor‑in‑possession financing and related charges, authorization for certain pre‑filing payments, and the appointment of a monitor and foreign representative.

The court was satisfied that the company qualified as a debtor company and that the restructuring proposal had substantial creditor support.

The court granted the requested relief, including a sealing order for confidential financial materials and approval of claims procedure and creditors’ meetings orders to facilitate the restructuring plan.

A motion was brought in a receivership proceeding to lift a stay of proceedings to permit continuation of a construction lien action and allow the lien claimant to set the action down for trial before the statutory expiry of the lien.

The receiver did not oppose lifting the stay but sought conditions, including setting aside a default judgment and noting in default entered against the debtor shortly after the receivership order.

The court held that the default judgment had been obtained contrary to the stay imposed by the appointment order and therefore had no force or effect.

Applying principles governing the lifting of insolvency stays and balancing prejudice to the parties, the court concluded that it was appropriate to lift the stay subject to conditions.

The court ordered that the noting in default and default judgment be set aside and permitted the receiver to defend the lien action.

The appellants, auditors and underwriters of Sino-Forest Corporation, appealed an order declaring that their claims for contribution and indemnity against Sino-Forest were 'equity claims' under the Companies' Creditors Arrangement Act (CCAA).

The claims arose from proposed shareholder class actions alleging misrepresentation.

The Court of Appeal dismissed the appeal, holding that the definition of 'equity claim' in s. 2(1) of the CCAA focuses on the nature of the claim rather than the identity of the claimant.

The court found that the appellants' claims for contribution and indemnity were clearly connected to the shareholders' equity claims and thus fell within the expansive statutory definition.

Skyservice Airlines Inc. went into receivership leaving unpaid airport and air navigation charges.

The airport authorities and NAV Canada obtained orders to seize and detain aircraft leased by Skyservice to recover the amounts owed.

The aircraft lessors appealed, arguing that Skyservice no longer 'owned or operated' the aircraft at the time of the applications due to the receivership, suspension of its air operator certificate, and the lessors' attempts to terminate the leases.

The Court of Appeal dismissed the appeal, applying the Supreme Court of Canada's decision in Canada 3000, holding that Skyservice remained the registered owner and operator in possession of the aircraft at the relevant time, and the statutory detention remedy takes priority over the lessors' property interests.

The applicants, comprising the First Leaside group of companies, sought an Initial Order under the Companies' Creditors Arrangement Act (CCAA) to conduct an orderly wind-down of their operations.

The court found that the applicants, viewed as a group, were insolvent and that the CCAA could be appropriately used for a liquidating proceeding.

The court also granted super-priority Administration and D&O Charges, dismissing arguments from secured creditors that provincial paramountcy issues precluded such priorities without further notice.

The applicant secured creditor moved to lift a stay of proceedings under the Companies’ Creditors Arrangement Act in order to appoint a receiver over insolvent debtor corporations.

The evidence showed that the court-approved sales process had collapsed, further DIP funding was unavailable after a sales process default, and the debtor companies’ board of directors had resigned, leaving operations effectively shut down.

The monitor supported the motion and no party opposed it.

Applying principles governing the lifting of a CCAA stay, including prejudice to stakeholders and the likelihood that the restructuring would fail, the court concluded that receivership was necessary to stabilize the situation and preserve asset value.

Following the dismissal of the moving party's motions for leave to appeal and for a stay, the successful responding parties sought their costs on a partial indemnity basis.

The moving party failed to provide any costs submissions.

The court considered the principle of proportionality and the moving party's conduct which thwarted the bankruptcy trustee's mandate.

Costs were fixed at $20,000 for the trustee and $7,323.41 for the applicants, payable by the moving party.

The moving party sought leave to appeal an order appointing an investigative receiver over it.

The moving party argued the motion judge erred by not first finding evidence of fraud or dissipation of assets.

The Divisional Court dismissed the motion, finding the motion judge applied the correct test under s. 101 of the Courts of Justice Act and that the appointment was just and convenient given the interconnectedness of the moving party with bankrupt companies and the flow of funds between them.

The test for leave to appeal was not met.

The appellant appealed an order approving a settlement by an Interim Receiver.

The appellant argued there was no evidence to sustain the motion judge's findings under the Soundair principles.

The Court of Appeal dismissed the appeal, finding ample evidence in the Interim Receiver's reports that no assets beyond certain Swiss accounts were locatable or realizable, and that there was a 60% chance of success in related California litigation.

The court concluded the settlement was the best that could be achieved in the circumstances.

Following the dismissal of the employees' appeal regarding related employers under the Employment Standards Act, the successful respondents sought costs.

The appellants and the Director of Employment Standards argued against a costs award, citing financial hardship and the public interest nature of the appeal.

The Court of Appeal found no basis to excuse the appellants on financial grounds and noted the Director could not use its statutory role to shield itself from costs after fully participating as an advocate.

However, because the appeal raised the interpretation of s. 4 of the Employment Standards Act for the first time in the court—a matter of broad public interest—the court ordered no costs.