Glenn A. Hainey

The creditor, Royal Bank of Canada, appealed a decision of a Registrar in Bankruptcy who held that its bill of costs was an unsecured claim and not subject to taxation.

The creditor had submitted a bill of costs to the trustee, asserting a preferred claim under sections 70(2) and 136(1)(g) of the Bankruptcy and Insolvency Act.

The Superior Court of Justice allowed the appeal, finding that the bill of costs was a proper preferred claim and that such bills delivered to a trustee do not require taxation by the bankruptcy court.

Crystallex International Corporation brought a motion for a sealing order to keep confidential certain financial information and strategic details contained in the Monitor's 33rd Report, including cash balance, litigation expenses, sanctions impact, and confidential mediation disputes.

The Ad Hoc Committee of senior noteholders and the Trustee opposed the sealing of financial information, arguing for the importance of disclosure in CCAA proceedings.

The court applied the Sierra Club test, which requires demonstrating a real and substantial risk to an important commercial interest, no reasonable alternative to sealing, and the salutary effects outweighing the deleterious effects on the open-court principle.

The court found Crystallex's evidence, consisting of bald and speculative statements, insufficient to meet this high evidentiary burden, and therefore dismissed the motion for a sealing order.

The applicant, Zeifman Partners Inc., sought declarations that payments made by a now-bankrupt company (Discovery Electric Ontario Limited) to its principal's family and a related company (Tuscany Lighting and Furniture Ltd.) were transfers at undervalue, and payments to a third-party supplier (Boz Electric Supply Ltd.) were preferential.

The court found the payments to the Baldassare family members and Tuscany were void under s. 96(1)(b) of the Bankruptcy and Insolvency Act (BIA), and the principal, Sam Baldassare, was held personally liable for these amounts.

The court dismissed the claim against Boz Electric Supply Ltd., finding those payments were made in the ordinary course of business, thereby rebutting the presumption of preference under s. 95(2) of the BIA.

A limitation period defence raised by all respondents was rejected, as the initiation of a Preference Motion was deemed the commencement of proceedings for the purposes of the Limitations Act, 2002.

The appellants, Ontario Lottery and Gaming Corporation and Ontario, appealed an arbitration decision that found they breached the Gaming Revenue Sharing and Financial Agreement (GRSFA) by ceasing to share certain non-gaming and complimentary revenues with the respondent, Ontario First Nations (2008) Limited Partnership.

The Superior Court of Justice dismissed the appeal, holding that the standard of review for commercial arbitrations remains reasonableness post-Vavilov.

The court found the arbitration panel's contractual interpretation was reasonable, firmly rooted in the agreement's text and surrounding circumstances, and that the honour of the Crown doctrine was correctly applied to the government-to-government agreement.

Two competing teams of legal counsel sought carriage of a proposed securities class action against CannTrust Holdings Inc. and other defendants for alleged misrepresentations regarding unlicensed cannabis production.

The court granted carriage to the Consortium team, finding that the competing TGF/RG team had a disqualifying conflict of interest because they excluded RBC Dominion Securities Inc., a current client of one of the firms, as a defendant.

The court held that excluding a necessary defendant to prefer a client's interests prejudiced the proposed class members by reducing potential recovery.

The Foreign Representative of Purdue Pharma L.P. and 23 other Chapter 11 Debtors sought recognition and enforcement of a U.S. Preliminary Injunction Order in Canada, and a stay of proceedings against certain related parties in Canada.

The motion aimed to pause extensive opioid-related litigation to facilitate a global settlement.

The Quebec Class Action Plaintiff, Riccardo Camarda, opposed the stay for a proposed class action against Canadian Purdue entities, arguing it was outside the U.S. proceedings' parameters.

The court granted the stay, emphasizing principles of comity and cooperation with foreign courts under the CCAA, finding the stay necessary for a global resolution and to prevent an uneven playing field among stakeholders.

The applicants, Canadian affiliates of Bumble Bee Foods, sought an amended and restated initial order under the CCAA to stabilize their business and facilitate a coordinated restructuring and asset sale alongside US Chapter 11 proceedings.

The court considered the recent amendments to the CCAA, specifically s. 11.001, and found that the requested relief—including an extension of the stay of proceedings, DIP financing, payment of pre-filing obligations, a Key Employee Retention Plan (KEIP), and various court-ordered charges—was reasonably necessary for the continued operation of the business in the ordinary course.

The court granted the amended and restated initial order.

The applicants, solar power project developers, sought a declaration that the Independent Electricity System Operator (IESO) did not have the right to terminate their Feed-In-Tariff (FIT) contracts for failing to achieve commercial operation by the Milestone Date for Commercial Operation (MCOD).

The IESO had previously waived this right but issued a warning letter revoking past waivers following a government directive to wind down pre-construction energy contracts.

The court applied principles of contractual interpretation and found that the FIT contracts, which included a 'time is of the essence' clause, unambiguously granted the IESO the right to terminate for failure to meet the MCOD.

The application was dismissed.

The applicants sought declaratory relief to prevent the Independent Electricity System Operator (IESO) from terminating their Feed-in Tariff (FIT) Contracts for failing to achieve commercial operation by the required milestone date.

The applicants argued that estoppel by convention applied based on a shared assumption that the IESO would grant an 18-month extension.

The court dismissed the application, finding no manifest representation by the IESO to establish a shared assumption, and noted that the entire agreement and waiver clauses in the contracts precluded reliance on past practices.

The trustee in bankruptcy disclaimed the bankrupt tenant's commercial lease.

The landlord subsequently drew down the full $2.5 million of a letter of credit provided as security under the lease.

The trustee brought a motion to determine the amount the landlord was entitled to draw.

The court held that upon disclaimer of the lease, the bankrupt's obligations to the landlord ceased, and the landlord was only entitled to draw $623,196.84 for its preferred claim of three months' accelerated rent under the Bankruptcy and Insolvency Act.

The landlord was ordered to pay the balance to the trustee.

The applicant, acting as the foreign representative for the syncreon Group, sought an Initial Recognition Order under Part IV of the CCAA to recognize scheme of arrangement proceedings commenced in the United Kingdom.

The court found that the UK proceedings under Part 26 of the Companies Act constituted 'foreign non-main proceedings' under the CCAA.

The court granted the recognition order, recognized the UK Convening Order, appointed an Information Officer, and dispensed with the statutory publication requirement, finding that a formal cross-border protocol was unnecessary in this case.

In the context of CCAA proceedings for Sears Canada, the Monitor brought a motion to enforce a settlement agreement with several former landlords regarding the valuation of their claims.

The landlords disputed the Monitor's calculation of their claims under the agreed Landlord Claim Formula and sought disclosure of the underlying calculations.

The court held that the landlords were entitled to the disclosure and could dispute the calculations, but only using the sources permitted by the formula.

Additionally, the court ordered one landlord, Primaris, to repay $10,000 it had unilaterally withheld for legal fees when returning a mistaken payment.

In the context of CCAA proceedings for Sears Canada Inc., the Employee Representative Counsel sought an order for directions regarding the distribution of an approximately $850,000 Deposit Fund Surplus, which resulted from the termination of employee life insurance coverage provided by Sun Life.

The counsel argued that Sears acted as an agent for its employees in remitting insurance premiums, and therefore, the portion of the surplus attributable to employee contributions should be returned to them pro rata.

The Monitor opposed, contending that Sears had a contractual entitlement to the surplus under the financial letter of agreement with Sun Life and that no agency or fiduciary relationship existed.

The court found that an agency relationship was established when employees permitted Sears to deduct and remit premiums on their behalf, preventing Sears from unjustly enriching itself by retaining the surplus.

The court ordered the Monitor to distribute the relevant percentage of the surplus to the participating employees.

This application, brought by Hollander Sleep Products, LLC as foreign representative for itself and other Chapter 11 Debtors (including Hollander Sleep Products Canada Limited), sought recognition of US Chapter 11 proceedings as foreign main proceedings under Part IV of the Companies’ Creditors Arrangement Act (CCAA).

The court granted the application, recognizing the Chapter 11 Cases as foreign main proceedings, imposing a stay of proceedings, recognizing certain First Day Orders, granting a DIP ABL Charge, appointing an Information Officer, and approving an Administration Charge.

A key aspect was the determination of Hollander Canada's Centre of Main Interests (COMI) as being in the United States, despite its Canadian registered office, due to its deep integration with the US parent's operations.

The court also approved a DIP ABL Charge with joint and several liability for Hollander Canada and a "creeping roll-up" provision, distinguishing the case from Payless Holdings Inc. LLC, (Re) by noting Hollander Canada's insolvency, the absence of material prejudice to Canadian creditors, and the inclusion of a quasi-marshalling construct.

This endorsement grants an order authorizing the Receiver to enter into an agreement related to a CCAA filing.

The order clarifies that it does not affect any claims or rights of unions and their related trust funds and members concerning unpaid wages and supplementary benefits under the Construction Act, including trust claims, lien rights, BIA claims, and WEPPA claims.

The Receiver's position is that Zurich, as the bonding company, is responsible for these valid claims, while Zurich reserves its rights.

The Bondfield Group, a major construction company, sought CCAA protection due to insolvency, over $1 billion in active contracts, and over 200 lawsuits.

The application was unopposed and resulted from extensive stakeholder negotiations.

The court granted an initial order for CCAA protection, including a stay of proceedings, approval of a tailored $8 million Debtor-in-Possession (DIP) facility funded by Zurich Insurance, an Administration Charge for professional fees, and a Directors' Charge for $3 million (excluding John Aquino).

The court emphasized the public interest in completing critical infrastructure projects and the preference for CCAA over receivership to preserve enterprise value.

This costs endorsement arose from the non-cooperation of Tim Long Chang, the sole officer of the bankrupt Accountable Solutions Accounting Professional Corporation (ASAPC), with the trustee, Albert Gelman Inc. Mr. Chang failed to provide required financial documents and attend creditor meetings, necessitating a motion to compel his examination under oath pursuant to s. 163 of the Bankruptcy and Insolvency Act.

Justice Hainey initially ordered compliance and examination, with costs to be determined by the hearing judge.

Master Kaufman, Registrar in Bankruptcy, found Mr. Chang's failure to comply was due to his blaming the trustee for the bankruptcy.

The motion and examination were deemed necessary.

Costs were awarded to the trustee, payable by Mr. Chang, in the amount of $11,000, after reductions for estimated counsel fees and hours related to a separate examination.

The defendants brought a motion for security for costs against the plaintiffs, seeking additional security for the discovery stage and for the period from discoveries to trial.

Previously, $45,000 in security had been ordered, with the court finding that 1636833 Ontario Inc. (833) had insufficient assets.

On this motion, the plaintiffs provided new, more comprehensive evidence of 833's financial condition, including significant bank balances, investment accounts, and revenue from an active business relationship.

The court found that 833 now demonstrated sufficient liquid and unencumbered assets in Ontario to satisfy a potential costs award, dismissing the defendants' motions for further security for costs.

The decision reiterated the limits of speculative inquiries into a company's future financial prospects on such motions.

JTI-Macdonald Corp. (JTIM) sought an Initial Order under the Companies’ Creditors Arrangement Act (CCAA) following a $13.5 billion judgment from the Quebec Court of Appeal and other significant health care costs recovery actions.

The court granted the Initial Order, including a stay of proceedings against JTIM and other defendants, appointment of Deloitte Restructuring Inc. as Monitor, approval of administrative, directors', and tax charges, authorization to pay pre-filing and post-filing obligations, appointment of Blue Tree Advisors Inc. as Chief Restructuring Officer, and authorization to appeal the Quebec Judgment to the Supreme Court of Canada.

The court found JTIM to be an insolvent company to which the CCAA applies, and that a stay of proceedings was appropriate to facilitate a collective solution for all stakeholders.

The plaintiffs moved to remove the defendant's designated representative for examination for discovery, Peter Hill, due to an irreconcilable conflict of interest.

Hill had a lucrative consulting contract with one of the incumbent telecommunications providers whose conduct was central to the action, and his contract required him to prefer his client's interests.

The court found that Hill's contractual obligations and his evasive testimony during discovery demonstrated a preference for the incumbent's interests over his duties as a witness, rendering him a demonstrably unsatisfactory representative.

The motion was granted, and Hill was ordered to be replaced by Kelly Gillis or another suitable witness.