Clifton Prophet

The Applicants in a CCAA proceeding moved for a reverse vesting order to approve a transaction with a purchaser related to a secured creditor, Marzilli.

The transaction would vest out the first-ranking security interest of another creditor, 212, and transfer its debt to a residual entity with no assets. 212 opposed the motion, arguing its debt assumption was part of the stalking horse bid that set the floor for the sales process.

The court applied the Third Eye and Harte Gold factors, finding that 212 had not consented to the vesting out of its interest and that the equities favoured 212.

The court dismissed the motion for the reverse vesting order, concluding it was not equitable to extinguish 212's first-ranking security interest under the circumstances.

The applicants sought an amended and restated initial order under the CCAA, including approval of a stalking horse sales process, a Key Employee Retention Plan, an increased administration charge, and an extension of the stay of proceedings.

The court granted most of the requested relief, finding it necessary for the restructuring and supported by the Monitor.

However, the court dismissed the applicants' request to stay a creditor's action against three directors on their personal guarantees, ruling that section 11.03(2) of the CCAA expressly prohibits staying actions against directors on guarantees relating to the company's obligations.

The plaintiff brought motions to discontinue the action against an individual defendant, to certify the action as a class proceeding, and for partial summary judgment.

The court approved the discontinuance as it did not prejudice the class and secured the corporate defendant's consent to certification.

The court certified the class action against the remaining defendants, finding that the pleadings disclosed causes of action under the Consumer Protection Act and Competition Act, and that a class proceeding was the preferable procedure.

However, the court dismissed the plaintiff's motion for partial summary judgment, concluding that the nature of the relationship between the defendants and the interpretation of the statutory provisions raised genuine issues requiring a full trial.

In the context of CCAA proceedings, the Board of Directors of Essar Steel Algoma Inc. brought a motion seeking to resume regular board meetings, receive confidential information, and be paid outstanding fees.

The Board had been previously disengaged due to an information sharing protocol and a prior court endorsement because the parent company was a bidder.

Although the parent company was no longer a bidder, the court dismissed the motion to reengage the Board, finding that the existing governance arrangements were functioning well and reengaging the Board could disrupt the restructuring.

However, the court granted the Board's request to have its independent counsel paid and included in discussions regarding the directors' potential liability.

The CCAA monitor of Algoma brought an oppression action under the CBCA against Algoma's parent company, Essar Global, regarding a transaction that transferred Algoma's critical port facilities to a related entity.

The court found that the monitor had standing to bring the action on behalf of creditors.

The court held that the port transaction and a change of control clause giving Essar Global a veto over any buyer of Algoma violated the reasonable expectations of creditors and were oppressive.

The court rejected the business judgment rule defence and ordered the deletion of the change of control clause and amended the agreements to allow Algoma to terminate them after a third-party loan is repaid.

In the context of a CCAA proceeding, Port of Algoma Inc. (Portco) brought a motion seeking an order compelling the debtor, Essar Steel Algoma Inc., to make post-filing payments under a Cargo Handling Agreement and for an administrative charge.

The court dismissed the motion, finding it premature as the Monitor was directed to commence an oppression proceeding regarding the underlying related party transactions.

The court also rejected Portco's renewed arguments under section 11.01(a) of the CCAA, noting they had been decided in a prior motion, and declined to lift the stay of proceedings, emphasizing that doing so would be contrary to the interests of the stakeholders and the restructuring process.