The Liquidator of Shoppers Trust Corporation applied for directions regarding the distribution of unanticipated surplus funds of approximately $6 million.
The motion judge ruled that a previous order fixing an earlier interest calculation date precluded creditors from claiming interest up to the winding-up date, thereby allowing the surplus to be paid to a subordinated noteholder.
The Court of Appeal allowed the appeal, holding that the motion judge erred in treating the motion for directions as a motion to vary and in failing to apply the fundamental insolvency principle of pari passu distribution.
The Court held that creditors are entitled to prove their claims for principal and interest to the date of the winding-up in priority to subordinated noteholders.
