Geoffrey B. Morawetz

The debtor company became insolvent and an interim receiver was appointed.

The receiver terminated all employees but continued operations to sell the business as a going concern.

The union sought to bring successor employer proceedings before the Ontario Labour Relations Board (OLRB).

The bankruptcy judge denied leave under the Bankruptcy and Insolvency Act (BIA).

On appeal, the Court of Appeal held that while s. 47(2) of the BIA does not authorize a bankruptcy court to determine successor employer status, s. 215 gives the court jurisdiction to deny leave to proceed before the OLRB based on bankruptcy considerations.

However, the bankruptcy judge erred by effectively determining the successor employer issue himself.

The appeal was allowed and the matter remitted to the bankruptcy court.

The appellant, representing unsecured noteholders, sought leave to appeal orders approving a CCAA reorganization plan for the GT Group of Companies.

The appellant argued the plan was unfair because it excluded the parent company, required the parent to transfer assets to subsidiaries, and deprived noteholders of rights to sue.

The Court of Appeal dismissed the application for leave, finding the asset transfer complaint illusory as the assets would be lost to secured creditors anyway, and the loss of rights to sue unsubstantiated.

The Court also noted the appellant's delay and failure to propose an alternative plan.