Frederick L. Myers

The debtor applicants sought court approval for a pre-packaged sale ('quick flip') of their assets to a new company owned by existing management, pursuant to section 36 of the CCAA.

The proposed transaction was supported by the senior secured creditor but opposed by a subordinate secured creditor, BDC Capital Inc., who was excluded from the sales process and given minimal notice.

The Superior Court of Justice dismissed the motion, finding that the debtor failed to meet its burden under sections 36(3) and 36(4) of the CCAA.

The court held that the sales process lacked transparency, failed to make good faith efforts to sell to unrelated parties after the senior debt was purchased at a discount, and did not demonstrate that the proposed consideration was superior to other potential offers.

In the context of CCAA proceedings, the Monitor sought directions on the interpretation of a litigation funding agreement and the approved Plan of Arrangement regarding the distribution of funds released from security for costs.

The successful defendants in related litigation argued the funds should be paid to them to satisfy outstanding costs awards.

The court rejected this interpretation, finding the plain wording of the agreements required the funds to be treated as Subsequent Cash on Hand for the benefit of Secured Noteholders.

The court also declined to approve the Monitor's historical activities, noting the expiry of limitation periods rendered such approval unnecessary, but granted the Monitor's discharge.

The Receiver brought a motion seeking approval of its activities, fees, and a further distribution of funds, as well as authorization to assign the debtor into bankruptcy and act as Trustee.

The Receiver also sought an order declaring the principal of the debtor a vexatious litigant.

The principal opposed the motion, raising arguments generated by artificial intelligence, including allegations of structural conflict of interest and prematurity.

The court dismissed the principal's objections, finding them to be abusive relitigation of previously decided issues.

The court approved the Receiver's requests, authorized the bankruptcy assignment, and declared the principal a vexatious litigant.

The Receiver in the receivership of the Traynor Ridge Group brought a motion to finalize the claims process.

The Receiver sought court approval of its disallowance of a $25.5 million claim by Trillion Energy International, Inc. for pure economic loss, its allowance of stockbrokers' indemnity claims, and its determination that unitholders' redemption claims do not rank with creditor claims.

The court upheld the Receiver's disallowance of Trillion's claim, finding that the Respondents owed no duty of care to Trillion regarding the selloff of Trillion shares by the Respondents' brokers.

The court also approved the stockbrokers' claims and confirmed that unitholders who submitted redemption notices prior to the receivership do not rank as creditors.

The Receiver was authorized to distribute funds to proven creditors.

The applicant Trustee in Bankruptcy sought costs on a substantial indemnity basis after successfully holding the respondents liable for $16 million in transfers at undervalue.

The court found that the respondents engaged in reprehensible litigation conduct by failing to make financial disclosure and swearing to a fiction regarding the transfers.

The court rejected the argument of one respondent that she should pay a smaller portion, finding she acted in concert with her siblings.

The court fixed costs at $500,000 all-inclusive on a substantial indemnity basis, payable jointly and severally by all respondents.

The applicant, a secured creditor owed over $7 million under a promissory note, applied for the appointment of a receiver and manager over all the assets, property, and undertaking of the respondent.

The applicant's security interest was limited to a single US patent and the product resulting from working that patent.

The court dismissed the application, finding insufficient evidence to establish that it was just and convenient to appoint a receiver over the entire business, especially given the lack of information regarding the value of the secured collateral, the scope of the respondent's assets, and why a private appointment would not suffice.

The Trustee in bankruptcy applied to set aside transfers of approximately $16.2 million from bankrupt borrower corporations to related non-borrower corporations under s. 96 of the Bankruptcy and Insolvency Act.

The court found that the transfers were made at undervalue, rendered the bankrupts insolvent, and were made with the intent to defraud, defeat, or delay creditors.

The court rejected the respondents' unsupported claims that the transfers were prepayments of future joint venture profits.

Judgment was granted declaring the transfers void and holding the recipient corporations and the individual controlling siblings jointly and severally liable as privies to the transfers.

The applicant, founder of a carpentry business, sought an oppression remedy against the respondent, the younger active manager and 49% shareholder.

The parties had entered into a unanimous shareholders' agreement to transition the business to the respondent while completing existing projects.

The respondent breached the agreement and his fiduciary duties by usurping the company's employees for his new competing business, failing to maintain proper financial records, and causing the original company to fail.

The court found the respondent liable for oppression and ordered him and his new company to jointly and severally disgorge $2,248,328 in profits.

Following the vacating of an ex parte order due to an exclusive jurisdiction clause, the respondent sought costs of the motion.

The court awarded costs on a partial indemnity basis, declining to award a higher scale as the applicant's conduct was not reprehensible.

The court allowed recovery for the value of work performed by the respondent's US counsel in drafting affidavits, noting that while foreign counsel cannot charge legal fees in Ontario, a fair and reasonable amount for the preparation work should be indemnified to avoid a windfall to the applicant.

Costs were fixed at $80,000 all-inclusive.

The Receiver brought a motion for an order requiring the debtor and its principal to pay $143,000 to the Receiver.

The funds represented the HST portion of a lease termination settlement paid to the debtor prior to the receivership.

The debtor argued the funds were not 'Property' under the receivership order because they were subject to a statutory deemed trust in favour of the CRA.

The court held that the funds arose from the debtor's real property and fell within the definition of 'Property'.

The court declared the funds must be paid to the Receiver, who would determine priorities in due course.

The applicant, an automotive manufacturer, sought an interim injunction to prevent the respondent supplier from ceasing delivery of component parts to its Windsor plant amid a pricing dispute.

The respondent challenged the court's jurisdiction, relying on an exclusive jurisdiction clause in the applicant's standard terms requiring all suits to be brought in Michigan.

The court found the clause clear and applicable, and held that the applicant failed to show 'strong cause' to avoid its own standard terms.

The court declined jurisdiction and vacated the previously granted ex parte interim injunction.

Following a motion to vary dismissed in a prior decision, the applicants sought enhanced costs based on the respondents' alleged misconduct, including apparent AI hallucinations in counsel's reply factum.

The court identified seven paragraphs containing fabricated quotations attributed to real cases with correct neutral citations.

Counsel denied using AI and attributed the errors to carelessness and misreading.

The court expressed inability to reconcile the explanation with the nature of the errors and referred the matter to the Law Society of Ontario for investigation.

The costs of the motion to vary were resolved by consent on a substantial indemnity basis.

The applicant sought a permanent injunction to restrain the respondent from breaching negative covenants in their long-term Royalty Agreement governing a collision repair shop network.

The respondent, which operated 65 shops under the applicant's brand, gave notice of its intention to unilaterally leave the relationship and rebrand its shops, openly acknowledging this would constitute a breach of contract.

The respondent argued damages would be an adequate remedy, invoking the concept of efficient breach.

The court rejected this argument, finding the damages were too complex, multi-layered, and potentially incalculable over the remaining 19-year term to make monetary compensation adequate.

The court granted the permanent injunction enforcing the negative covenants and awarded costs of $185,000 to the applicant.

The trustee in bankruptcy moved for a phase-one determination that profit payments made by Douglas Grozelle to net winners in a fraudulent Ponzi scheme were void as against creditors and recoverable for the estate.

The court found the hallmarks of a Ponzi scheme, held insolvency and fraudulent intent could be inferred globally, and concluded the payments were void under the Fraudulent Conveyances Act and not saved by good-faith or good-consideration defences.

The court approved a two-stage insolvency process: common liability issues resolved summarily now, with individualized quantum determinations in phase two.

The winners’ cross-motion for broad directions attacking the trustee’s process and authority was dismissed.

The Monitor in a liquidating CCAA proceeding sought approval of its fees, a distribution to unsecured creditors, an extension of the stay of proceedings, and an order exempting it from tax and withholding obligations under various federal and provincial statutes.

The court approved the fees, distribution, and stay extension.

However, the court declined to grant the tax exemptions, finding no basis in law or evidence to declare that the Monitor is not a 'representative' or is not 'distributing' funds under the tax statutes, especially without notice to the relevant taxation authorities.

The applicant creditor sought to allocate a $5 million payment received from the respondent debtor to various outstanding debts, including legal fees and a late information disclosure fee, rather than to a consent judgment.

The court held that the debtor failed to plainly and irrevocably allocate the payment at the time it was made, entitling the creditor to allocate the funds.

However, the court found that the $5,000 per day late disclosure fee was an extravagant and unconscionable penalty, and therefore void.

The court also declined to refer the creditor's legal fees to assessment, finding them reasonable and noting the debtor's failure to review the fee summaries in good faith.

At a case conference for a contempt of court proceeding, the respondent appeared with newly retained counsel.

On consent, the matter was adjourned to allow counsel to prepare.

The court discharged the previously appointed amicus curiae, as the respondent was no longer self-represented.

The court also amended the title of proceeding to reflect the criminal nature of the contempt proceeding, while noting it would remain a sub-bundle in the civil file.

The defendants sought costs after successfully moving to strike portions of the plaintiffs' statement of claim.

The court noted that the motion was essentially a demand for particulars and that the plaintiffs' pleadings were defective.

However, the court criticized the high costs incurred by both sides for a motion that could have been resolved through cooperation.

The court ordered the plaintiffs to pay the defendants' costs in the cause on a partial indemnity basis, fixed at $20,000.

The individual respondents moved under Rule 59.06 to vary a previous order that enforced arbitral awards and held them jointly and severally liable for costs.

They argued the judge made a slip by holding them personally liable without piercing the corporate veil, and alternatively relied on newly discovered facts regarding an alleged promise not to enforce costs.

The Superior Court of Justice dismissed the motion, finding that the previous order accurately reflected the arbitral tribunal's costs award against all respondents.

The court held that costs liability as an unsuccessful party does not depend on piercing the corporate veil, and found no evidence of the alleged promise.

Lien claimants sought orders protecting their construction lien claims from dismissal under sections 37 and 46 of the Construction Act due to claims not being set down for trial within two years of commencement.

The claims had been stayed by receivership orders.

The court granted the orders sought, finding that the processes employed were not undermining the policy of the Construction Act and that the circumstances warranted protection of the lien claims while the receivership proceeded.

The court emphasized the importance of balancing insolvency principles with the statutory intent of the Construction Act to deal with liens expeditiously.