Geoffrey B. Morawetz

The Liquidator of Maple Bank GmbH brought a motion seeking approval of a Settlement Agreement and a Sale Transaction with the Bank of Montreal, as well as an order sealing a Confidential Supplement containing unredacted transaction details.

The court applied the Soundair principles and the Sierra Club test, finding the settlement and sale to be fair, reasonable, and beneficial to the estate.

The court also granted the sealing order to protect commercially sensitive information that could prejudice ongoing negotiations with other parties.

The motion was granted on consent.

The Proposal Trustee sought court approval for the proposals of Wasaya Airways Leasing Ltd. (WALL) and the joint proposal of Wasaya Airways Limited Partnership (WALP) and Wasaya General Partner Limited (WGPL).

The court considered the appropriateness of a joint proposal for related corporations under the Bankruptcy and Insolvency Act (BIA), noting the lack of specific BIA provisions but relying on prior judicial interpretations.

The proposals, which offered unsecured creditors a better outcome than bankruptcy, were overwhelmingly approved by creditors.

The court found the proposals reasonable, beneficial to creditors, and made in good faith, also acknowledging the public interest in the debtors' essential services to remote First Nations communities.

The Receiver brought a motion seeking a determination on whether the estates of Redstone Investment Corporation (RIC), Redstone Capital Corporation (RCC), and 1710814 Ontario Inc. o/a Redstone Management Services (RMS) should be substantively consolidated.

RIC and RMS Investors argued for consolidation, while RCC Investors opposed it, citing a General Security Agreement (GSA) granting RCC priority over RIC's assets.

The court found the founder's (Mr. So) evidence unreliable and dismissed subjective investor state of mind as irrelevant to the consolidation analysis.

Applying the Northland factors, the court determined that the elements of consolidation were not present, as assets were segregable, financial statements were separate, and significant prejudice would result to RCC Investors if consolidation were ordered.

The motion for substantive consolidation was denied.

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.

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.

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.

Applicants sought a preliminary order under s. 192 of the Canada Business Corporations Act to implement a proposed corporate arrangement restructuring significant unsecured note debt.

The restructuring contemplated an amalgamation followed by an exchange of unsecured notes for a combination of cash and new secured notes, forming part of a broader recapitalization of the applicants’ financing structure.

The court considered whether the proposed arrangement met the statutory requirements under the CBCA, including solvency, impracticability of implementing the restructuring through other statutory mechanisms, and good faith.

The court also considered whether it had authority to grant interim relief including a stay of enforcement rights pending negotiation and implementation of the arrangement.

Finding the statutory requirements met and the application brought in good faith, the court granted the requested preliminary order and authorized a temporary stay to maintain the status quo while stakeholders negotiated the restructuring.

The defendants brought a motion seeking reconsideration or rehearing of reasons issued by a motions judge allowing an appeal from a Master's report in a construction lien dispute.

They relied on Rule 59.06 of the Rules of Civil Procedure and s. 123(4) of the Courts of Justice Act, arguing the reasons were incomplete and failed to address several issues before the court.

The court held that the earlier decision constituted a valid decision under the Courts of Justice Act and that s. 123 applies only where a judge is unable to render a decision, not where a party disputes the adequacy of the reasons.

Any alleged legal error was properly the subject of an appeal rather than reconsideration.

The motion was dismissed and the plaintiff was awarded costs of $45,000 inclusive of disbursements and HST.

In CCAA proceedings involving a debtor company whose assets had already been sold and where no plan of arrangement was contemplated, the representative plaintiff in a proposed securities class action moved to lift the stay of proceedings and to amend the claims procedure order after failing to file a proof of claim by the claims bar date.

The directors argued that the claims procedure barred the class action against them and extinguished related claims, including access to insurance proceeds.

The court held that both the stay and the claims bar order are discretionary tools intended to facilitate restructuring or liquidation objectives under the CCAA.

Because the restructuring process had effectively concluded and no plan was forthcoming, using the claims bar order to extinguish the class action would serve no functional purpose under the CCAA.

The court exercised its discretion to lift the stay and modify the claims procedure order to permit the plaintiff to proceed with the class action.

Companies applied for initial protection under the Companies’ Creditors Arrangement Act in respect of insolvency arising from liquidity issues and substantial unsecured investor debt.

Evidence showed significant unpaid promissory notes and bonds, loan losses, and transfers of company funds to a related management entity.

The court applied the insolvency tests drawn from the Bankruptcy and Insolvency Act and concluded the companies were debtor companies under the CCAA.

A stay of proceedings was granted to permit restructuring or realization of the lending portfolio.

The court also approved an administration charge and a directors’ and officers’ charge to support the restructuring process.

The plaintiffs brought an urgent motion for interim and interlocutory injunctive relief to restrain the defendants from completing a share sale pursuant to a unanimous shareholders agreement in the context of a shareholder dispute.

The plaintiffs alleged improper termination of a director and employment relationship and sought to preserve the status quo pending trial.

Applying the test for interlocutory injunctions from RJR‑MacDonald v. Canada (AG), the court accepted that a serious issue to be tried existed but held that the plaintiffs failed to demonstrate irreparable harm.

The court found that the remedies sought, including share valuation and damages, could be adequately compensated monetarily at trial.

As a result, the motion for injunctive relief was dismissed and costs were awarded to the defendants.

In insolvency proceedings under the Bankruptcy and Insolvency Act, the debtor sought approval of a stalking horse sale process, related charges, and an extension to file a proposal.

The court raised concerns that the originally proposed break fee and overbid increments would discourage competing bids.

After revision reducing the break fee and overbid requirements, the court found the revised structure reasonable and approved the stalking horse process, the administration and D&O charges, and the stalking horse charge.

The court also granted a sealing order over commercially sensitive materials applying the Sierra Club test and extended the time for the debtor to file its proposal.

The applicant sought an order directing an assessment of the respondent solicitor’s accounts under the Solicitors Act more than 12 months after the accounts were delivered and paid in full.

The court considered whether “special circumstances” existed to justify permitting a late assessment.

Evidence showed the applicant had signed a retainer agreement setting an hourly rate, received detailed accounts, and paid them without objection at the time.

The applicant failed to identify specific overcharging or explain the delay in seeking an assessment.

The court held that the applicant had not met the burden of establishing special circumstances and dismissed the application with costs.

Following the granting of summary judgment dismissing the plaintiff’s action, the court determined the appropriate costs award.

The defendant sought substantial-indemnity costs, arguing that the plaintiff advanced serious but unsubstantiated allegations of theft and misconduct and engaged in conduct that increased litigation costs through numerous emails containing outlandish claims.

The court held that the seriousness and lack of foundation for the allegations justified a substantial‑indemnity approach.

Applying the principles in Boucher v. Public Accountants Council for the Province of Ontario and the factors under Rule 57, the court reduced the claimed amount and awarded a fair and reasonable lump-sum costs award.

Application under the Variation of Trusts Act seeking court approval of a variation to a family trust established in 1992.

The proposed variation would permit reorganization and distribution of trust assets to defer a significant capital gains tax liability arising from the Income Tax Act 21‑year deemed disposition rule.

All adult beneficiaries and trustees consented, and the Children’s Lawyer did not oppose the variation subject to a payment protecting contingent interests of minor and unborn beneficiaries.

The court applied the test from Finnell v. Schumacher Estate and related authorities, assessing whether the variation preserved the settlor’s intention and conferred a benefit on minor, unborn, unascertained, and incapable beneficiaries.

The court concluded that the variation preserved trust capital, benefited protected beneficiaries, and would be accepted by a prudent adult acting in self‑interest.

Following settlement of the substantive estate dispute, the parties disagreed over the language of a release, resulting in a motion to resolve the wording and determine costs.

The court found the dispute over wording insignificant and concluded the motion was unnecessary and could have been avoided through cooperation between counsel.

The revised release ultimately satisfied both parties.

Applying Rule 57.01 of the Rules of Civil Procedure and the principles governing costs, the court held the responding party's lack of responsiveness warranted cost consequences.

Partial indemnity costs were awarded to the moving parties but reduced to reflect the straightforward nature of the motion.

The defendants moved under Rules 21.01 and 25.11 of the Rules of Civil Procedure to strike portions of a statement of claim alleging participation in a multi‑million dollar investment fraud and civil conspiracy.

They argued the conspiracy allegations were inadequately pleaded and that a paragraph describing the scheme as a “typical bridge loan fraud” known to law enforcement was prejudicial and incapable of being pleaded back to.

The court held that the pleading adequately set out the elements of civil conspiracy, including the alleged agreement, overt acts, unlawful conduct, and resulting damages, and that conspiracy allegations should not be held to an extraordinary level of particularization at early stages.

The impugned paragraph was also relevant to the defendants’ alleged knowledge of the fraudulent scheme and was not vexatious or unduly prejudicial.

The motion to strike was dismissed with costs.

In proceedings under the Companies’ Creditors Arrangement Act, the court addressed scheduling issues for a complex multi‑party trial involving the allocation of assets among creditor groups.

The parties proposed deferring the trial from April 1, 2014 to April 28, 2014, but disagreement remained regarding whether the later date would be feasible.

The court concluded that maintaining the earlier date risked a chaotic trial and that a rolling start date would create further uncertainty.

To ensure certainty and orderly preparation, the court rescheduled the trial to begin May 12, 2014 for 20 days and set case management and trial management conferences.

The court also required all parties to provide comprehensive fee and disbursement summaries to monitor escalating litigation costs.

A secured creditor applied for the appointment of a receiver over a group of integrated technology companies operating in Canada and the United States following defaults under a loan agreement and the expiry of a forbearance arrangement.

The creditor also sought approval of a stalking horse asset purchase agreement and sales process.

The court found the debtors insolvent and concluded that appointing a receiver under s. 243 of the Bankruptcy and Insolvency Act and s. 101 of the Courts of Justice Act was just and convenient, particularly to facilitate a cross-border restructuring and prevent fragmented enforcement actions by creditors.

Applying the principles governing receiver sales from Royal Bank of Canada v. Soundair Corporation, the court approved the stalking horse process and sealed confidential commercial appendices containing sensitive information.

Orders appointing the receiver, approving the sales process, and sealing the confidential materials were granted.