David Ullman

Following the grant of leave to appeal in a bankruptcy matter concerning whether a secured creditor could credit-bid for a cause of action said not to attach to its security, the case management judge issued directions for the appeal.

The court permitted the appellant to rely on previously filed leave materials or to file fresh appeal materials, and allowed the respondent to file revised materials on a set schedule.

Intervention motions were ordered to proceed in writing under specified page limits and deadlines.

The hearing date was left to the Appeal Scheduling Unit, with oral argument capped at two hours, and costs of the leave hearing reserved to the appeal panel.

The appellant challenged a bankruptcy order and a related post-judgment Mareva order granted at the request of a court-appointed monitor holding a substantial judgment debt.

The court held the bankruptcy order was appealable as of right under s. 193(c) of the Bankruptcy and Insolvency Act and treated the Mareva order as a final order appealable under s. 6(1)(b) of the Courts of Justice Act in the circumstances.

On the merits, the court found no reversible legal or discretionary error in rejecting objections to the monitor’s authority, rejecting allegations of collateral purpose, and refusing dismissal or adjournment under ss. 43(7) and 43(10) of the Bankruptcy and Insolvency Act.

The court also upheld continuation of the Mareva relief as complementary to bankruptcy administration and dismissed the appeal with agreed costs.

The decision addresses motions regarding the appointment of representative counsel for current and former employees and retirees of Hudson’s Bay Company ULC and related entities in ongoing Companies’ Creditors Arrangement Act (CCAA) proceedings.

The Court declined to appoint any of the nominated law firms as representative counsel at this stage, instead appointing the Honourable Herman Wilton-Siegel as an independent third party to evaluate proposals and make a recommendation.

The Court also approved amendments to the Sale and Investment Solicitation Process (SISP) to remove the company’s art and artifact collection from the SISP and to appoint Heffel Gallery Limited to conduct a separate auction for the collection, subject to further court approval of procedures.

The reasons review the legal framework for appointing representative counsel and the importance of balancing stakeholder interests in complex insolvency proceedings.

This endorsement grants a brief adjournment in the Companies’ Creditors Arrangement Act (CCAA) proceedings involving Hudson’s Bay Company ULC and related entities, following ongoing discussions between the applicants and stakeholders.

The court extends the stay of proceedings, increases the Directors’ Charge, amends the relative priorities of charges, and approves the engagement of Reflect Advisors, LLC as financial advisor.

The court finds the requested relief appropriate, unopposed, and supported by the Monitor, and orders the requested amendments to the Initial Order.

The Ontario Securities Commission (OSC) applied for the appointment of a receiver over the respondents under section 129 of the Securities Act.

The parties sought directions from the court regarding non-disclosure obligations under sections 16 and 17 of the Act, particularly concerning the production and use of investigation materials.

The court endorsed a protocol allowing redacted and unredacted affidavits to be filed, balancing the need for confidentiality with the respondents’ right to make full answer and defence.

The court also addressed scheduling and adjournment of the application, confirming the interim monitorship and setting a new hearing date.

The Insurers brought a motion for a declaration that the "Prior Acts Exclusion" in their Directors and Officers (D&O) insurance policies barred coverage for a claim asserted against Just Energy's D&Os.

The claim, filed by a representative plaintiff in a class action, sought unpaid wages and benefits from a period prior to Just Energy's Companies’ Creditors Arrangement Act (CCAA) filing.

The court found the Prior Acts Exclusion to be clear and unambiguous.

It determined that the exclusion applied to acts or omissions committed by anyone prior to the CCAA filing date, and that this interpretation was consistent with the commercial context of the policies, which were intended to cover post-filing D&O liability during insolvency.

The court concluded that applying the exclusion did not nullify the policy's main purpose or contradict the reasonable expectations of the parties.

The Insurers' motion was granted, and the representative plaintiff's request for relief against the Insurers was denied.

The Receiver brought a motion seeking court approval for two asset sale transactions (AMI Transaction and Bottom Line Transaction), associated sealing orders for confidential financial and employee information, and approval of its Sixteenth and Seventeenth Reports.

The court applied the Soundair Principles to approve the sales, finding the Receiver made sufficient effort to obtain the best price and acted with integrity.

The court also granted the sealing orders, applying the Sherman Estate test, to protect confidential economic terms, third-party contracts, and employee information, finding the benefits outweighed the impact on the open court principle.

All requested relief was granted.

The Royal Bank of Canada initiated an application for receivership against Peace Bridge Duty Free Inc. (PBDF) due to lease defaults, leading to the appointment of a monitor to facilitate a resolution with its landlord, Buffalo & Fort Erie Public Bridge Authority.

After a year without resolution, the Landlord moved to lift the stay on proceedings, arguing PBDF failed to pay "normal rent" as required by the Appointment Order.

The court declined to immediately lift the stay, finding the term "normal rent" in the Appointment Order ambiguous given the prolonged period of reduced payments due to COVID-19 restrictions.

The court ordered mandatory mediation between the Landlord and Tenant by March 31, 2023, to facilitate a business resolution, requiring the Tenant to provide a new proposal with financial information.

Further directions will be provided post-mediation.

The applicant, a cyber-insurer, sought relief from forfeiture under s. 462.42 of the Criminal Code to recover funds paid out to two insured victims of a ransomware attack.

The offender's cryptocurrency had been seized and forfeited.

The court held that the insurer had a valid interest in the forfeited property limited to the amount of Bitcoin paid as ransom by one of the victims, which had been erroneously omitted from the sentencing restitution order.

The court dismissed the claim for further restitution and for relief from forfeiture regarding other insurance payouts, such as consultation fees and lost profits, finding they did not constitute an interest in the specific forfeited property.

The Globe and Mail brought a motion to set aside a sealing order granted by Conway J. that sealed a supplementary affidavit and excerpts of surreptitiously recorded transcripts in a corporate winding-up application.

The responding party opposed the motion, arguing that unsealing the materials would harm his privacy and dignity interests.

Applying the Supreme Court of Canada's decision in Sherman Estate, the court found that the responding party failed to establish that unsealing the court file posed a serious risk to an important public interest that would justify rebutting the strong presumption in favour of open courts.

The motion was granted and the sealing order was set aside.

This motion, initiated by the Receiver, determined competing priorities under s.78 of the Construction Act between construction lien claimants (represented by Maxion Management Services Inc.) and a third-ranking mortgage held by Donald Dal Bianco.

The court found that Dal Bianco's mortgage, registered after the first lien arose and securing funds advanced between 2012 and 2015, did not qualify for priority as a "subsequent mortgage" under s.78(6) because the advances were not made "in respect of that mortgage." Furthermore, it was not a "building mortgage" under s.78(2) as it did not involve an intention to secure future financing.

The court emphasized the general priority of lien claimants and the mortgagee's burden to prove exceptions.

Consequently, the lien claimants were granted priority over the third mortgage.

This case involved two motions within a bankruptcy proceeding.

The bankrupt, Dennis Wing, sought to lift a freeze direction imposed by the Ontario Securities Commission (OSC) on his registered retirement saving plan (RRSP) and locked-in retirement accounts (LIR), arguing they were exempt assets under the Bankruptcy and Insolvency Act (BIA).

The OSC, in turn, sought a declaration that a monetary penalty and costs ordered against Wing for violating a cease trade order (CTO) were not claims provable in bankruptcy, allowing them to enforce the claims post-discharge.

The court dismissed Wing's motion, finding the freeze direction served a purpose given potential opposition to his discharge.

The court granted the OSC's motion, applying the three-part test from AbitibiBowater and Orphan Well Association, concluding that the OSC was not a creditor, the obligation was not incurred before bankruptcy, and the claim's monetary value was too speculative at the date of bankruptcy.

The court also found that a subsequent settlement agreement superseded an earlier undertaking by the OSC regarding enforcement.

The Monitor of Target Canada Co. and its affiliates, undergoing CCAA proceedings, sought advice and directions from the court regarding the treatment of several late-filed claims.

The court applied the four-part test from *Blue Range Resource Corp. Re*, considering inadvertence, good faith, and prejudice to other creditors.

The court found that five claimants (Fruits & Passion, Lou Pharma, Kulwinder Kaur Rai, Capital Brands Inc., and Mohammad Alam) satisfied the test, allowing their claims against Target Canada Co. However, claims against Target Corporation and Target Brands were barred due to the prejudice caused by disturbing the sanctioned plan and releases, which Target Corporation relied upon for its significant contributions.

The court also provided directions on distributions for allowed late claims and a framework for addressing future unknown late claims, emphasizing the finality of the sanctioned plan.

Rytec Corporation sought an order declaring that the automatic stay of proceedings under s. 69(1)(a) of the Bankruptcy and Insolvency Act (BIA) did not apply to a motion it intended to bring for injunctive relief against Emergency Door Service Inc. (EDS) to prevent post-filing conduct.

EDS had filed a notice of intention to make a proposal under the BIA.

The court dismissed Rytec's motion, holding that the term "remedy" in s. 69(1)(a) of the BIA includes injunctive proceedings to prevent post-filing conduct of a debtor who has filed a notice of intention to make a proposal.

The court emphasized a purposive interpretation of the BIA, aiming to provide breathing room for debtors to restructure, and found no material prejudice to Rytec that would warrant lifting the stay.