David Bruce Bish

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.

Essar Capital Limited and USW Local 2251 brought motions within a Companies’ Creditors Arrangement Act (CCAA) proceeding.

Essar Capital sought to re-open the Sale and Investment Solicitation Process (SISP) and compel the disclosure of information to Essar Global for a potential bid.

Local 2251 sought court advice on engaging in discussions with Ontario Steel Investments Ltd. regarding potential transactions.

The court dismissed both motions, finding no basis to interfere with the established SISP, noting Essar Global's prior failure to demonstrate financial capability and the lack of a formal bid from Ontario Steel.

The court emphasized the need to maintain the integrity of the court-ordered process and avoid delays detrimental to the restructuring.

The Cadillac Fairview Corporation Limited appealed the partial disallowance of its claim by the trustee in bankruptcy of Danier Leather Inc. The core issue was whether occupation rent paid by a court-appointed receiver, acting as an agent for the trustee, could be deducted from the landlord's priority claim for accelerated rent under section 136(1)(f) of the Bankruptcy and Insolvency Act.

The court found that an agency relationship existed between the trustee and the receiver, and therefore, the occupation rent paid by the receiver was properly credited against the accelerated rent claim.

The appeal was dismissed.

Portco sought orders for immediate and future payments under a Cargo Handling Agreement, and a US$5 million charge on Algoma's assets, arguing the payments were required post-filing in a CCAA proceeding.

The CCAA Applicants (Algoma) and DIP lenders opposed, citing the DIP Agreement's budget approval requirement and an arguable right to equitable set-off against a promissory note owed by Portco's parent company (EGFL) to Algoma.

The court found that the DIP Agreement and Initial Order did not mandate payments without DIP lender approval and that an arguable case for equitable set-off existed.

The motion was dismissed as premature, pending determination of the set-off issue and other concerns raised by the Monitor regarding the Portco transaction and recapitalization.

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 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.

In CCAA restructuring proceedings, shareholder class action plaintiffs sought to limit the scope of a stay of proceedings so that certification, leave, and amendment motions in related Ontario and Quebec securities class actions could proceed against auditors, underwriters, and former directors.

The court applied the established test for lifting a CCAA stay, considering relative prejudice, balance of convenience, and the merits.

Given the pending appeal concerning whether shareholder claims constituted “equity claims” under the Companies’ Creditors Arrangement Act and the imminent creditor meeting regarding a proposed plan of arrangement, the court found that maintaining the stay temporarily would avoid prejudice and promote orderly proceedings.

The court held that the balance of convenience favoured maintaining the stay so that the auditors and underwriters could focus on the appeal and restructuring process.

The motion to limit the stay was dismissed without prejudice to renewal after the creditor meeting.

In CCAA proceedings, the applicant sought an order declaring that shareholder class action claims alleging losses from the purchase or sale of its securities constituted “equity claims” under s. 2 of the Companies’ Creditors Arrangement Act.

The applicant also sought a determination that indemnity and contribution claims advanced by auditors and underwriters in relation to those shareholder actions were likewise equity claims.

The court held that shareholder claims alleging losses from trading in the company’s securities fall squarely within the statutory definition of equity claims and are subordinated to creditor claims.

Indemnification and contribution claims arising from those shareholder actions were also characterized as equity claims because their nature derives from the underlying shareholder claims.

However, the court left open the possibility that claims for defence costs might not necessarily be equity claims depending on the outcome of the underlying litigation.

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.

In CCAA restructuring proceedings involving a retail apparel company, the monitor sought approval of an asset sale agreement for the debtor’s Costa Blanca business and the debtor sought an extension of the stay of proceedings.

The court considered the criteria under ss. 36(3) and (4) of the Companies’ Creditors Arrangement Act and found the sale process had been conducted fairly and transparently and that the proposed transaction provided the best available consideration to creditors, notwithstanding that the purchaser was related to the debtor.

Approval of the sale was granted subject to a condition requiring the transaction to close by a specified deadline, failing which the debtor and monitor were required to seek further court directions.

The court also granted the debtor’s request to extend the stay of proceedings, approve liquidation of certain store inventory and fixtures, continue a key employee retention plan, and authorize repayment of secured loans.

The applicants sought leave to appeal a discretionary order denying them leave to file a representative claim on behalf of uncertified classes in ongoing CCAA proceedings.

The Court of Appeal found no error in the motion judge's exercise of discretion, noting she properly considered the forum of future class certification, the absence of individual claims, and the prejudice of altering the claims process after the claims bar date.

Leave to appeal was refused.

The appellant, representing unsecured noteholders, sought leave to appeal orders approving a CCAA reorganization plan for the GT Group of Companies.

The appellant argued the plan was unfair because it excluded the parent company, required the parent to transfer assets to subsidiaries, and deprived noteholders of rights to sue.

The Court of Appeal dismissed the application for leave, finding the asset transfer complaint illusory as the assets would be lost to secured creditors anyway, and the loss of rights to sue unsubstantiated.

The Court also noted the appellant's delay and failure to propose an alternative plan.