Earl Patrick Shea

The receiver moved to determine appellate entitlement from receivership-related orders under the BIA.

The court held no appeal as of right under ss. 193(a) or (c), denied leave, and granted the receiver’s motion.

The Court of Appeal for Ontario considered whether Seabrook Bros.

Mechanical Ltd., a subcontractor and lien claimant, was entitled to a revised assessed value for its security in the insolvency proposal of North House Foods Ltd. The court held that there was no appeal as of right under s. 193(a)-(c) of the Bankruptcy and Insolvency Act, but granted leave to appeal under s. 193(e) due to the importance of the issue.

The appeal was dismissed, as the motion judge had not erred in finding that the appellant's security (a lien on a leasehold interest) had no realizable value in the circumstances.

The court clarified the onus on dissatisfied creditors under s. 50.1(4) of the BIA and the limited recourse for lien claimants in insolvency.

The tenant, a duty-free store operator at the Peace Bridge, brought a cross-motion seeking a declaration that it was not required to pay base rent during the 18-month period its store was closed due to COVID-19 border restrictions.

The tenant argued the landlord breached a lease provision requiring consultation on regulatory changes and breached its duty of good faith by making unreasonable demands.

The court dismissed the motion, finding the landlord engaged in good faith negotiations and offered reasonable accommodations.

The court held it cannot rewrite the lease or impose a new rent structure where the parties failed to reach an agreement, as the lease lacked objective benchmarks for such an adjustment.

This is an appeal from an order of the Commercial List judge concerning insolvency proceedings.

The appellants, Bryton, sought to exercise an option to purchase a property and obtain orders declaring the option valid and immune from challenge by other creditors under various acts (Fraudulent Conveyances Act, Assignments and Preferences Act, Canada Business Corporations Act oppression remedy, and Bankruptcy and Insolvency Act).

The application judge dismissed Bryton's request for a vesting order and declaratory relief, finding that the claims were not res judicata and that declaratory relief was not the appropriate vehicle to pre-emptively bar unadjudicated creditor claims.

The Court of Appeal upheld the application judge's decision, confirming that the validity of the option was not res judicata and that the refusal to grant declaratory relief was a proper exercise of discretion, as the application procedure was not suitable for dismissing unproven claims.

This is the third installment of a trial to determine the fair value of a corporate entity and other damages owed by an estate, following previous findings of oppression.

The court addressed complex accounting issues, including the outstanding balance of a shareholder loan, financing fees, and the ownership interests and loan obligations of added parties in related entities.

The court made specific findings on these financial adjustments, leading to a significant payment ordered from the estate to the applicant.

The decision also clarified the application of res judicata in multi-stage proceedings and emphasized the consequences for parties responsible for poor financial record-keeping.

The applicants and respondents were shareholders in a corporation that acquired a hotel and redevelopment project.

Following a finding of oppression against the respondent, the corporation was ordered to be liquidated.

In this trial to resolve disputes over the distribution of liquidation proceeds, the respondent claimed entitlement to development fees, hotel management fees, reimbursement of expenses, and repayment of shareholder loans including advances made to a subsidiary.

The court dismissed the claims for development and management fees, finding no written agreement and a failure to comply with the disclosure requirements for self-interested contracts under s. 132 of the Business Corporations Act.

The court allowed certain business expenses while characterizing others as loan repayments, and held that it was just and equitable to include advances made to the subsidiary in the calculation of the respondent's shareholder loan.

The court-appointed Receiver brought a motion for directions regarding an offer to purchase a large Muskoka property en bloc.

The original buy-out order directed the Receiver to sever the property to allow departing members of the corporation to be paid their share while remaining members kept a retained parcel.

After four years of delays and significant expenses, the severance process was incomplete.

The court found it had jurisdiction to vary the original order due to materially changed circumstances.

The court directed the Receiver to halt the severance process and accept the en bloc purchase agreement, which had the support of the vast majority of stakeholders and represented fair market value.

The applicant Receiver sought judicial review of an Ontario Labour Relations Board decision declaring it a successor employer under the Labour Relations Act.

The Receiver had been operating an insolvent debtor's retirement home business for several years.

The Divisional Court upheld the Board's decision, finding it reasonable that the Receiver met the test for a successor employer.

The Court also agreed that section 14.06(1.2) of the Bankruptcy and Insolvency Act does not immunize a receiver from prospective collective bargaining obligations, but only from pre-appointment liabilities.

The application for judicial review was dismissed.

This motion, brought within a receivership, addressed a dispute between Sluyter Isaac Investments Inc., a secured creditor, and 1902408 Ontario Ltd., the registered owner of the Brockville Property.

Sluyter claimed $600,000 plus interest and costs, asserting a secured interest in fixtures attached to the property, and sought payment from the net proceeds of sale. 1902408 Ontario Ltd. opposed, arguing the claim was statute-barred.

The court held that Sluyter's claim to enforce its security interest in fixtures, arising under the Personal Property Security Act, is an interest in personal property, not real property, and is therefore subject to the two-year limitation period under the Limitations Act, 2002, rather than the ten-year period under the Real Property Limitations Act.

The Proposal Trustee brought a motion for court approval of the amended joint proposal of Artiva Inc. and Livewell Foods Canada Inc. under s. 58 of the Bankruptcy and Insolvency Act, and a related plan of arrangement under the Canada Business Corporations Act.

The proposal was supported by the majority of creditors, but opposed by a dissenting creditor who sought an adjournment due to late delivery of proofs of claim.

The court denied the adjournment, finding the time to challenge claims for voting purposes had expired.

The court approved the proposal and arrangement, finding them viable, made in good faith, and likely to generate a superior recovery for creditors than bankruptcy.

The noteholders appealed the Proposal Trustee's disallowance of their unsecured claims in the BIA proposals of several subsidiary corporations.

The Trustee had determined that the subsidiaries' guarantees were limited to an initial US$3 million advance and did not cover a subsequent US$12 million advance, and that the initial advance had been fully satisfied by a property transfer.

The Superior Court upheld the Trustee's interpretation of the guarantees but found an error in the debt allocation, ruling that US$828,000 of the guaranteed debt remained outstanding and should be recognized as an unsecured claim.

This case conference order addresses procedural and factual disputes in an ongoing insolvency proceeding involving Eureka 93 Inc. and three related companies under the BIA.

The noteholders (Dominion Capital LLC) had postponed creditor votes on proposals, seeking further investigations and information regarding asset valuations and the validity of their claims.

The debtors challenged the noteholders' status as creditors for one proposal.

The court provided directions to resolve the gridlock, ordering the Proposal Trustee to assess and value the noteholders' proofs of claim, setting deadlines for examinations of witnesses, and mandating the completion of votes on the proposals.

The court emphasized the Trustee's role in validating claims and cautioned against allowing peripheral issues to unduly complicate the summary insolvency process.

The debtors, Eureka 93 Inc. and related companies, filed a notice of intention to make a proposal under the BIA.

Two motions were heard: an unopposed motion by the debtors for an interim arrangement order under the Canada Business Corporations Act, which was granted; and an opposed motion by the noteholders (Dominion Capital LLC) seeking an order for document production relevant to an appraisal, cross-examination of Seann Poli, and examination of a representative of the first mortgagee, all in advance of the creditors' meeting to vote on the proposal.

The court dismissed the noteholders' request for examinations as premature, noting that the BIA provides mechanisms for investigation after the trustee's report or by adjourning the creditors' meeting.

However, the court ordered the debtor's appraiser to disclose and produce source documents used for the land appraisals, but declined to order disclosure for a business valuation under the BIA.

The applicant debtors brought an unopposed motion to extend the time for making a proposal under the Bankruptcy and Insolvency Act.

The court granted the extension to June 12, 2020, finding that the criteria of good faith, diligence, lack of prejudice, and potential viability were met, with an improved outlook despite COVID-19 closures.

The decision also included observations on the conduct of virtual hearings during the COVID-19 emergency, emphasizing the importance of notice to all parties and upholding the open court principle, even when public interest is low or a sealing order is in place.

The court flagged the need for more robust solutions for public access to virtual hearings in the future.

The debtors, Eureka 93 Inc. and its subsidiaries, sought administrative consolidation of four related notices of intention to make a proposal, an extension of time to file proposals, and approval for interim priority financing (DIP financing) under the Bankruptcy and Insolvency Act.

The motion was opposed by Dominion Capital LLC, representing a group of noteholders, who argued there was no viable business to rehabilitate.

The Proposal Trustee supported the plan.

The court granted the motion, finding that immediate liquidation would have dire effects, while the extension and interim financing offered a prospect of increased value and a successful proposal, despite inherent risks in the cannabis industry.

The court imposed bi-weekly reporting requirements.

The applicant brought an application within an ongoing oppression remedy proceeding seeking repayment of a shareholder loan.

The applicant sought to impose enterprise liability on related companies and personal liability on the estate of his former business partner.

The court found that the former partner had engaged in oppressive conduct by diverting corporate funds for personal benefit, defeating the applicant's reasonable expectations.

The court held the estate personally liable for the immediate repayment of $2,421,300 of the shareholder loan, but declined to impose enterprise liability on the related companies or personal liability on the estate trustee.

The applicant, Dundee Oil & Gas Limited, sought approval for the sale of substantially all its assets and the assignment of associated executory contracts under s. 11.3 of the CCAA.

The court initially adjourned the matter to require further evidence regarding the purchaser's financial stability and ability to manage environmental remediation obligations.

After reviewing supplementary evidence, including cash flow forecasts and the purchaser's operational plans, the court was satisfied that the purchaser would be able to perform the obligations.

The court approved the transaction and the assignment of the contracts.

The appellants appealed an order directing the liquidation of Tarn Financial Corporation under the oppression provisions of the Business Corporations Act.

The application judge found that the appellant had engaged in self-dealing and diverted corporate funds for personal benefit, and ordered liquidation as the only viable remedy to separate the parties.

On appeal, the appellants argued the judge should have ordered a forced buyout instead.

The Divisional Court dismissed the appeal, holding that the application judge made no palpable and overriding error and properly exercised his discretion, as a forced buyout would leave the appellant in control of the valuation process and fail to ensure fair market value.

The applicants sought to discharge a collateral mortgage without paying a $4.25 million 'Participation Amount' owed to the respondents.

The applicants argued the Participation Amount was invalid on several grounds, including that it was a clog on the equity of redemption, offended section 8 of the Interest Act, constituted a criminal rate of interest under section 347 of the Criminal Code, violated the Unconscionable Transactions Relief Act, and was an unenforceable penalty.

The court rejected all these arguments, finding the Participation Amount was a valid collateral advantage agreed to by sophisticated commercial parties in exchange for forbearance.

The court ordered the funds held in court to be paid to the respondents.

The applicants and respondents formed an incorporated partnership to acquire and develop a hotel and adjacent lands.

The applicants alleged that the respondent unilaterally altered the corporation's capital structure to give himself absolute voting control, engaged in self-dealing, and funneled corporate funds to personal accounts.

The court found the respondent's conduct constituted oppression under section 248 of the Business Corporations Act.

Given the complete breakdown of trust and lack of alternative remedies, the court ordered the winding up of the corporation and appointed a liquidator.