Davis Preger

The court-appointed Receiver sought approval for the sale of a property owned by the Debtor, 253 Queen Street Inc., and an Administration Order.

The sale was supported by secured creditors Homedale-Eagle Corporation and Sky Mortgage Corporation but opposed by the Debtor and its equity holders.

The opposing parties argued the purchase price was too low, the environmental indemnity was not assumed by the purchaser, and their beneficial interest in the property was not recognized.

The court applied the Soundair principles for approving sales in receivership, finding the Receiver acted providently and fairly.

The court rejected the claims of beneficial ownership based on trust law and the Land Titles Act, affirming the priority of registered mortgages over unregistered beneficial interests.

The Receiver's motion for approval of the sale and the Administration Order was granted.

The applicant, Romspen Investment Corporation, sought the appointment of a receiver over the respondents' property and approval of an agreement of purchase and sale (the "Times Transaction").

A fifth-ranking mortgagee, Sow Capital Ontario Limited, brought a competing motion to approve its own power of sale transaction (the "281 Transaction") and sought to suspend the receiver's powers.

The respondents opposed both sale transactions, arguing for a receiver-conducted auction.

The court appointed Ernst & Young Inc. as receiver, approved the Times Transaction, and granted a sealing order, finding that the Times Transaction offered the best outcome for all stakeholders and that a further sales process was unnecessary.

The court dismissed Sow's motion to suspend receivership powers and the respondents' request for an auction or a reservation of rights to claim improvident sale.