Emily Fan

In a landmark CCAA proceeding involving Hudson's Bay Company, the court declined to approve the assignment of 25 major retail department store leases across Canada to a new tenant, Ruby Liu Commercial Investment Corp., despite the transaction representing the highest bid and generating approximately $50 million in net proceeds for creditors.

The court found that the proposed assignee failed to meet the reasonableness standard under section 11.3(3) of the CCAA, particularly regarding its ability to perform the substantial and ongoing obligations under the leases.

The decision emphasizes that section 11.3 is an extraordinary power that must be exercised sparingly, and that the court must balance the interests of all stakeholders, including the contractual counterparties (landlords) who would be compelled into a long-term relationship with an untested and undercapitalized purchaser.

The court also rejected the applicants' arguments that certain lease provisions constituted ipso facto clauses violating the anti-deprivation rule and section 34 of the CCAA.

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.

The plaintiff, ID Inc., sued the Toronto Wholesale Produce Association (TWPA) and StrategyCorp for breach of contract, interference with economic relations, and conspiracy regarding a project to convert a static billboard at the Ontario Food Terminal to a digital sign.

The plaintiff alleged an oral agreement for a share of advertising revenue and a written Sale and Maintenance Agreement (SMA).

The court found no oral agreement existed but held that the TWPA breached the SMA and its duty of good faith by waiving a 360-day permit condition and then secretly contracting with a competitor.

Claims against StrategyCorp for interference, conspiracy, and breach of confidence were dismissed.

The plaintiff was awarded damages for lost profits on the construction and maintenance of the sign.

This costs endorsement followed the dismissal of an interlocutory motion brought by the respondent (Greg) seeking to transfer the applicant's (Suzanne's) shares in the family farm corporation.

The court found the respondent's conduct, including non-compliance with court orders, financial disclosure failures, and litigation tactics, amounted to bad faith and litigation bullying.

Consequently, the court awarded full indemnity costs of $24,113.64 to the applicant, emphasizing that such egregious conduct warranted sanction.

The plaintiffs brought a motion for summary judgment after the defendant failed to close on an agreement of purchase and sale for a residential property.

The defendant claimed she was misled about the legality of a basement apartment.

The court found no genuine issue for trial, noting that even if the defendant discovered the basement was not a legal rental unit after signing, she never raised it as a reason for not closing and had requested extensions for other reasons.

Summary judgment was granted in favour of the plaintiffs for the shortfall in the resale price and carrying costs.

Co-owners of a Toronto property brought an application under the Partition Act seeking an order for sale and directions regarding the method of sale.

While all parties agreed the property should be sold, they disagreed on whether the sale should proceed by public auction or by sealed bid.

The court discounted partisan affidavit evidence from the parties and professional firms with financial interests in the process.

Emphasizing the need to safeguard the integrity of the sales process and maximize value, the court concluded that a sealed-bid process was preferable in circumstances where some co-owners intended to bid on the property.

The court ordered the sale to proceed by sealed bid under the supervision of an independent sales officer, with final process terms subject to court approval.