Emrys Charles Davis

The appellant Noteholders appealed orders approving a bridge loan, a $36 million DIP financing facility, and a Management Incentive Plan (MIP) for the respondent debtor under the CCAA.

The debtor's principal asset was a $3.4 billion arbitration claim against Venezuela.

The Noteholders argued the DIP financing, which could outlast the CCAA protection period and granted the lender a 35% interest in the arbitration proceeds, was effectively an arrangement requiring creditor approval.

The Court of Appeal dismissed the appeal, finding that the supervising judge reasonably exercised his broad discretion under s. 11.2 of the CCAA to approve the financing necessary to pursue the arbitration, and that the financing did not constitute a plan of arrangement.

In Companies’ Creditors Arrangement Act proceedings, the debtor sought approval of a debtor-in-possession financing facility, an extension of the stay of proceedings, approval of a management incentive plan, and approval of the monitor’s actions.

Certain noteholders opposed the proposed financing and incentive plan and proposed an alternative short-term DIP facility intended to maintain the status quo pending negotiation of a restructuring plan.

The court held that the debtor’s board had exercised reasonable business judgment after a competitive process and that the proposed financing satisfied the statutory considerations under s. 11.2 of the CCAA.

The court rejected the argument that the DIP facility constituted a de facto plan of arrangement requiring creditor approval and found the alternative financing proposal tactical and inconsistent with market conditions.

The management incentive plan was also approved as reasonable and necessary to retain key personnel responsible for pursuing a significant international arbitration claim forming the debtor’s primary asset.

In Companies’ Creditors Arrangement Act proceedings, the debtor sought approval of short‑term bridge financing pending a larger DIP financing facility.

Competing bridge financing proposals were advanced by an existing lender and by noteholders.

The court approved the debtor’s preferred proposal despite it being more expensive, holding that the board’s decision was protected by the business judgment rule and was supported by the debtor’s financial advisor and the monitor.

A cross‑motion by noteholders seeking revisions to the DIP auction procedures and exemption from signing a non‑disclosure agreement was largely dismissed, though the deadline for qualification as a bidder was briefly extended.

The appellant, acting as trustee for noteholders, appealed the dismissal of its application against the respondent mining corporation.

The appellant argued that the respondent's failure to obtain foreign environmental permits triggered a 'Project Change of Control' under the trust indentures, and that the respondent improperly sold equipment purchased with note proceeds.

The appellant also sought an oppression remedy under the Canada Business Corporations Act, arguing the respondent was insolvent and its directors should have prioritized creditor interests.

The Court of Appeal dismissed the appeal, finding no breach of the trust indentures and upholding the application judge's conclusion that the directors' business decisions were reasonable and did not constitute oppression, even in the context of financial distress.