The Monitor and the Van Iersel Parties brought motions for security for costs against Kenneth Schaller, a former shareholder of three debtor companies in a CCAA proceeding.
Schaller filed a wide-ranging motion seeking to reopen the CCAA proceedings, set aside the approval and reverse vesting order, and replace the Monitor, alleging fraud and misconduct.
The court found that Schaller appeared to be ordinarily resident outside Ontario and that there was good reason to believe the motion was frivolous and vexatious.
The court ordered Schaller to post security for costs totalling $400,000 ($250,000 to the Monitor and $150,000 to the Van Iersel Parties).
The decision also addressed Schaller's submission of AI-hallucinated case citations, finding this to be a serious breach of his obligation to verify authorities submitted to the court.
