Graham D. Smith

The appellants, holding unsecured crossover bonds, appealed a CCAA judge's decision that the common law 'interest stops' rule applies in CCAA proceedings, preventing them from claiming post-filing interest above their principal debt and pre-petition interest.

The Court of Appeal dismissed the appeal, confirming that the 'interest stops' rule is a fundamental tenet of insolvency law that applies to CCAA proceedings to ensure fair treatment of creditors and orderly administration.

The Court clarified that while creditors cannot legally claim post-filing interest, the rule does not preclude a negotiated CCAA plan from providing for such payments.

The appellants, representing regional airline pilots, sued Air Canada pilots for unlawful act conspiracy, alleging they unlawfully prevented the implementation of a merged seniority list.

The trial judge dismissed the claims, finding that some defendants committed no unlawful acts due to their right to dissent, and that the unlawful acts of others did not cause the loss of a chance to implement the list because Air Canada would never have agreed to it.

The Court of Appeal upheld the trial judge's findings, concluding that the rank-and-file members did not breach their union contracts and that the chance of implementing the merged list was de minimis.

In a joint cross-border insolvency trial concerning the allocation of approximately $7.3 billion in lockbox funds from the sale of global business lines and residual intellectual property, the court interpreted the Master R&D Agreement as an operating transfer-pricing document that granted limited licence rights but did not govern post-insolvency allocation.

The court rejected both the position that one Canadian debtor owned all sale proceeds by virtue of legal title and the position that the EMEA debtors jointly owned all intellectual property by operation of law.

Applying unjust enrichment principles and the broad remedial jurisdiction available in CCAA proceedings, the court held that a just result required a pro rata allocation among debtor estates based on allowed claims.

The court further directed that duplicate claims be counted only once for allocation purposes, that intercompany claims be included, and that interim distribution proposals be brought forward.

The moving party, an approved purchaser of the debtor's assets, sought to cancel the automatic stay pending appeal of orders appointing a receiver and approving the asset sale.

The responding party, an unsuccessful bidder and software licensee, opposed the motion and appealed the sale order.

The Court of Appeal (in chambers) granted the motion to cancel the stay under s. 195 of the Bankruptcy and Insolvency Act, finding that the responding party likely lacked standing to appeal the sale order as a disappointed bidder and would not suffer undue harm if the stay was lifted, as its contractual rights to software source codes remained intact.

The appellant appealed an order recognizing and implementing a U.K. court order that authorized a meeting of creditors for a scheme of arrangement.

The Court of Appeal held that the motion judge erred in relying on the Reciprocal Enforcement of Judgments (U.K.) Act, as the U.K. order was not a final judgment for the payment of money and the appellant was not served with the originating process.

However, the Court upheld the recognition order based on the common law rules of private international law, finding that the lack of finality was not a bar to recognition and that the real and substantial connection test was met.