Geoffrey B. Morawetz

In proceedings under the Companies’ Creditors Arrangement Act arising from the insolvency of a payday lending enterprise, class members moved for approval of settlement administration measures related to consumer class action settlements.

The requested approvals included a settlement distribution protocol, notice plan, privacy and information management protocol, and appointment of a claims administrator.

A third‑party creditor that had purchased loan receivables from the debtor sought accommodation to assert an equitable set‑off against class members’ settlement recoveries.

The court held that the creditor’s claim lacked the close connection required for equitable set‑off and was effectively a prejudgment garnishment against settlement funds.

The administrative protocols were approved as fair, reasonable, and in the best interests of class members.

In CCAA proceedings involving a payday lending group, class counsel for Ontario consumer class actions sought court approval of contingency fees and disbursements following settlement of related class proceedings.

The settlements produced monetary recoveries exceeding $10 million for class members, with potential additional recovery from future litigation proceeds.

The court reviewed the reasonableness of the requested 25% contingency fee and disbursements using established factors including results achieved, litigation risk, and responsibility assumed by class counsel.

The motion was unopposed.

The court concluded the requested fees and disbursements were reasonable and approved the amounts.

In CCAA proceedings involving a payday lending enterprise, class members in Ontario consumer class actions moved for approval of three settlement agreements forming part of a broader global resolution of litigation involving the debtor companies, their directors and officers, and related parties.

The settlements resolved certain class claims and partially resolved a third‑party lender claim, providing more than $10 million in recovery with potential participation in future litigation proceeds.

The court applied established settlement approval factors including likelihood of success, litigation risks, counsel recommendations, absence of objections, and arm’s‑length negotiations.

The court concluded that the settlements were fair, reasonable, and in the best interests of the class and the restructuring process.

In CCAA proceedings involving the liquidation of a national retail chain, the court considered a motion by the court-appointed monitor seeking approval of its reports and activities.

Certain landlord creditors opposed the request, arguing that broad approval could prejudice creditor rights and improperly create issue estoppel or res judicata effects in future disputes.

The court held that while approval of monitor activities serves useful procedural and policy purposes in CCAA proceedings, caution is required where approval is sought in a general sense without full fact-finding.

The court approved the monitor’s reports but limited the effect of the approval so that only the monitor, in its personal capacity and regarding its own potential liability, could rely on the approval.

This approach balanced protection for the monitor with preservation of creditor rights.

The appellants appealed a motion judge's decision refusing to strike the respondent's claim under Rule 21.

The respondent had pleaded the common employer doctrine against a group of corporate defendants and their operator.

The Divisional Court dismissed the appeal, agreeing with the motion judge that the application of the common employer doctrine to operators of a group of common employers is a developing area of law, and it was not plain and obvious the claim would fail.

The court also found the claim was pleaded with sufficient particularity.

The appellant appealed an order varying an assessment officer's report regarding legal fees.

The Divisional Court upheld the motion judge's findings that the assessment officer provided only conclusory reasons for reducing the respondent's hourly rates and had no evidentiary basis for disallowing the cost of two lawyers appearing in court.

The appeal was dismissed with costs fixed at $8,000.

The applicant, a 76-year-old family physician, sought judicial review of an order by the College of Physicians and Surgeons' Quality Assurance Committee requiring him to practice under clinical supervision.

The order followed peer assessments that identified critical deficiencies in his practice posing an immediate risk to patient safety.

The applicant argued he was denied procedural fairness because he did not receive a copy of the final review before the Committee's initial letter, and that the Committee failed to consider his responses.

The Divisional Court dismissed the application, finding no breach of procedural fairness when the process was viewed as a whole, and concluding that the Committee had properly considered the applicant's submissions.

In a CCAA proceeding, the applicants sought approval of a lease transaction agreement under which interests in eleven leases would be surrendered to certain landlord entities for consideration and related benefits, including releases of potential claims.

The court held that the process leading to the transaction was fair and reasonable, the consideration was reasonable having regard to market value, and the transaction was in the best interests of the debtors and stakeholders.

The court also noted that the monitor's consent did not determine the validity, ranking, or quantum of a substantial intercompany claim arising from the termination of related arrangements, which would be addressed in a later claims process.

Applying the Sierra Club principles, the court granted the requested sealing order over confidential appendices.

In CCAA proceedings arising from the wind-down of a national retail chain, a pharmacy franchisee association moved to set aside disclaimer notices delivered in respect of franchise agreements for in-store pharmacies, and sought representative status, counsel, a financial advisor, and estate-funded professional fees.

The court held that the statutory factors under s. 32(4) of the Companies’ Creditors Arrangement Act favoured permitting the disclaimers to stand, as store closures were inevitable, the monitor had approved the notices, setting them aside would delay liquidation and divert estate value from unsecured creditors generally, and no evidence showed continued operation in dark stores would improve the franchisees’ financial circumstances.

The court nevertheless found limited collective representation would assist with transition issues including regulators, inventory return, and claims, and appointed the association as representative, with counsel and a financial advisor.

Funding of up to $100,000 inclusive of disbursements and HST was approved, but no administrative charge was granted.

In a CCAA proceeding, a group of employees moved for appointment as court-appointed representatives for non-opt-out employees in the insolvency proceedings.

The Initial Order had already appointed representative counsel and required a process to identify up to seven employee nominees.

The court accepted that the proposed representatives reflected different employee roles and regions across Canada, noted the support of the applicants and monitor, and granted the motion.

The appellants appealed a Small Claims Court judgment dismissing their claim for damages to their in-ground pool caused by improper winterization.

The appellants alleged the respondent breached its contractual obligation to provide pool training and was negligent in failing to warn them of the dangers of improper winterization.

The Divisional Court allowed the appeal and ordered a new trial, finding that the trial judge made palpable and overriding errors by reaching conclusions and making findings of fact prior to hearing all of the evidence, which tainted his assessment of the subsequent evidence and expert testimony.

The applicant sought recognition in Ontario of U.S. Chapter 11 proceedings involving a large casino-entertainment corporate group, including an Ontario subsidiary managing the Windsor casino.

The court held the applicant was a proper foreign representative and that the U.S. proceeding qualified as a foreign main proceeding because the debtors’ centre of main interests was in the United States.

The court granted the initial recognition order and supplemental relief to preserve the status quo and protect Canadian assets while the U.S. venue dispute remained unresolved.

The supplemental order was modified to exclude a stay of actions against directors and officers.

In CCAA proceedings, the applicants sought sanction of an amended and restated plan of compromise and arrangement, approval of related releases, and an extension of the stay.

The court held the plan satisfied the established sanction requirements because statutory compliance was met, the voting results were unanimous in all creditor classes, and the plan was fair and reasonable in light of the available alternatives and stakeholder support.

The court also approved third party and director/officer releases as rationally connected to the restructuring and necessary to its successful completion.

The stay was extended and the Monitor's activities and reports were approved.

In a receivership arising from CCAA proceedings, the moving party sought payment of post-filing collections on several assigned loans and the return of funds advanced for a failed loan transaction.

The court held the assigned loans had been absolutely and equitably assigned, and that the debtor acted only as collection agent.

Applying the constructive trust framework in Soulos, the court found the stay should preserve rather than reorder pre-filing proprietary rights, and that the post-CCAA collections could not be treated as estate property for general creditors.

The court also held the failed transaction advance was held for a specific purpose and remained subject to a trust obligation, with Quistclose trust principles supporting that result in the alternative.

The motion was granted, subject to a holdback for any amount owed by the moving party to a related entity.

On an initial CCAA application, the court granted broad first-day relief to a large national retailer and related entities to permit an orderly supervised wind-down of Canadian operations.

The court found the applicants were insolvent under both the BIA definition and the Stelco liquidity test, and held the CCAA could properly be used for a liquidation or wind-down rather than a going-concern restructuring.

The court extended the stay to related partnerships, co-tenancy rights, and certain derivative claims against the U.S. parent and affiliates, approved employee protections including a trust, KERP, and representative counsel, authorized critical supplier payments and DIP financing, and approved administration and directors’ charges.

A sealing order was also granted over a confidential engagement letter.

In ongoing restructuring proceedings under the Companies’ Creditors Arrangement Act, the debtor company sought court approval of a coke conversion agreement with its parent corporation.

The motion was brought on an urgent basis due to operational deadlines relating to coal shipments and winter shipping constraints on the Great Lakes.

The monitor supported the agreement and reported that it would be cash‑flow positive, would recall employees from temporary layoff, and would not interfere with the ongoing sales and restructuring process.

The court held that it had jurisdiction under s. 11 of the CCAA and found the agreement appropriate in the circumstances.

A sealing order was also granted to protect confidential commercial information contained in an unredacted version of the agreement.

The applicants sought an initial order under the Companies’ Creditors Arrangement Act to commence restructuring proceedings and implement a proposed recapitalization supported by secured noteholders holding the majority of the applicants’ debt.

The court found the applicants qualified as debtor companies under the CCAA and were insolvent due to defaulted secured notes exceeding $110 million and an inability to meet obligations as they became due.

The court approved the initial order, including a stay of proceedings, administration and directors’ charges, authorization to pay certain pre‑filing obligations, and appointment of a monitor with authority to seek Chapter 15 recognition in the United States.

The court also granted a claims procedure order and a meetings order permitting creditors to vote on a proposed plan of compromise and arrangement, including classification of creditor groups and authorization to proceed with a consolidated plan.

The applicants sought leave to appeal to the Divisional Court from an order dismissing their motion for summary judgment.

They argued the motion judge failed to properly apply the summary judgment framework from Hryniak v. Mauldin and failed to provide adequate reasons.

The Divisional Court dismissed the motion for leave, finding no good reason to doubt the correctness of the motion judge's decision, as the judge had properly identified genuine issues of credibility regarding alleged undue influence and elder abuse, and correctly concluded that fact-finding powers could not resolve the dispute fairly.

The court also found the proposed appeal did not involve matters of general public importance.

The defendant bailiff company brought a motion for leave to appeal a decision dismissing its motion for summary judgment.

The bailiff argued it had statutory immunity for seizing a crane, relying on a previous case.

The Divisional Court dismissed the motion for leave to appeal, finding the previous case distinguishable because the bailiff here seized property from a location and person not named in the writ of seizure.

The court held the bailiff did not act in accordance with the court order, and there was no good reason to doubt the correctness of the motion judge's decision.

Third party lenders sought declarations in CCAA proceedings that funds, brokered payday loans, and receivables advanced through the debtor company were their property and not assets of the debtor estate.

The court examined the written broker agreements and the parties’ actual practices, including commingling of funds, guaranteed returns to lenders, and capital protection arrangements that insulated lenders from loan losses.

The evidence showed the lenders received fixed 17.5% returns irrespective of customer loan performance and that all loan proceeds and repayments flowed through the debtor’s general accounts.

The court held that the parties’ conduct varied the broker agreements and created a debtor–creditor relationship rather than a trust or agency relationship.

The lenders’ motions for declarations of ownership were dismissed and the disputed receipts were held to belong beneficially to the debtor.