Grant B. Moffat

The foreign representative of a Chapter 11 debtor group brought a motion for recognition in Canada of a US Bankruptcy Court confirmation order approving a reorganization plan.

The motion was unopposed.

A group of co-defendants in Canadian opioid litigation sought a bar order (Pierringer-type protection) as a term of the recognition order, which was opposed by a provincial government.

The court granted the recognition order, finding no public policy grounds under s. 61(2) of the CCAA to refuse recognition and that the new plan's consensual-only third-party releases were consistent with Canadian insolvency law.

The court declined to impose the bar order, distinguishing the applicable authorities and holding that the co-defendants' position arose from the plan's releases — not from a prior government stipulation — and that the co-defendants had already received bar order protection in a separate settlement.

This decision addresses three motions in the receivership of the Bridging Funds: (1) the Receiver’s motion for an interim distribution to unitholders, (2) approval of a settlement with the BlackRock Parties, and (3) the unitholders’ motion for a constructive trust.

The court approved the interim distribution but required a sufficient reserve for the disputed Cerieco claim until its final determination.

The BlackRock settlement was approved.

The constructive trust motion was deferred pending resolution of the Cerieco claim.

The decision provides detailed guidance on the treatment of creditor and unitholder claims in a complex receivership under the Securities Act.

The Thomas Canning Claimants appealed two procedural decisions by the Claims Officer in the Bridging Finance Inc. receivership, which denied their requests for extensive pre-hearing disclosure of documents from the Receiver and examinations of third-party witnesses.

The Claimants argued these denials were procedurally unfair and prioritized expediency over their disclosure rights.

The court dismissed the appeal, finding the Claims Officer's decisions were discretionary case management orders entitled to deference, and that no palpable and overriding error or failure of natural justice occurred.

The court emphasized that receivership claims processes are intended to be expeditious and summary, unlike normal civil litigation.

The Moving Parties (First Nations and Municipalities) sought to stay the implementation of a $150 million settlement between Purdue Canada and Canadian Governments, arguing it might be unlawful, prejudicial, preferential, or an abuse of process, and sought financial disclosure from Purdue Canada.

The court dismissed the motion, finding it lacked a basis to compel disclosure or stay the settlement.

The court affirmed its jurisdiction over Purdue Canada was limited to the CCAA recognition proceedings, not general supervision, and found no evidence of bad faith or insolvency to warrant the requested orders.

The SMA 2 Unitholders sought a declaration that substantive consolidation does not apply to Bridging SMA 2 LP and approval for a second interim distribution.

The Receiver and Unitholder Representative Counsel opposed, arguing the motion was premature as various distribution issues, including the full economic impact of consolidation, remained unresolved.

The court dismissed the motion, deferring to the Receiver's position that a determination on substantive consolidation and further distributions was premature given the incomplete factual record and outstanding distribution issues.

LTL Management LLC, an indirect subsidiary of Johnson & Johnson, sought recognition of its second US Chapter 11 bankruptcy proceeding as a foreign main proceeding under the Companies’ Creditors Arrangement Act (CCAA) in Canada.

This application followed the dismissal of its initial Chapter 11 filing due to insufficient immediate financial distress.

The new Chapter 11 was based on a negotiated Plan Support Agreement establishing an $8.9 billion trust for talc-related claims.

The Ontario Superior Court of Justice granted the recognition order, along with ancillary relief including a stay of proceedings against LTL and related Canadian co-defendants, and the appointment of Ernst & Young Inc. as Information Officer.

The court found the US proceeding to be a foreign main proceeding, with LTL's Centre of Main Interests (COMI) in the United States, and that the relief was appropriate to coordinate proceedings and ensure equal treatment of talc-related claims.

The application was unopposed.

The applicant, PricewaterhouseCoopers Inc. (Bridging Receiver), sought an order to appoint Richter Inc. as receiver and manager over Northern Citadel Capital Inc., One8One Davenport Inc., and 181 Davenport Retail Inc. due to an outstanding and defaulted loan.

Northern Citadel and One8One did not oppose the appointment but challenged its scope. 181 Retail opposed the appointment entirely, arguing its obligations were limited to a repaid loan and its security should have been discharged.

The court found the loan was in default and the contractual documents clearly established 181 Retail's liability as a guarantor for the full loan amount, rejecting arguments based on subjective intent or unfulfilled discharge instructions.

The court granted the appointment of Richter as receiver over all respondents but denied the Bridging Receiver's requests for sweeping investigative powers and immediate authorization to assign respondents into bankruptcy, deeming them unnecessary at that stage.

The Receiver brought a motion seeking approval of its proposed Net Asset Value (NAV) Methodology, the calculation and publication of the 2021 NAV, and the 2022 Permitted Transfers for the Bridging Funds.

The NAV Methodology was developed to facilitate the transfer of units from RRSP to RRIF accounts for unitholders turning 71, as required by the Income Tax Act.

The court found the requested relief appropriate, noting support from Representative Counsel and no opposition from the Ontario Securities Commission or the Canada Revenue Agency.

The motion was granted and the Receiver's Fifteenth Report was approved.

The Receiver brought a motion for an order approving an interim cash distribution of $78 million to the two institutional unitholders in Bridging SMA 2 LP.

The court found it appropriate to make an interim distribution but reduced the amount to $46 million to account for the potential impact of substantively consolidating the various Bridging Funds, an issue that had yet to be determined.

The Receiver brought an unopposed motion for a Claims and Unitholdings Identification Order and for approval of its activities as described in its 12th Report.

The court found the proposed order practical and reasonable to assist the Receiver with the distribution process.

The motion was granted and the Receiver's activities were approved.

The Receiver of Bridging Finance Inc. sought court approval to terminate a sale and investment solicitation process (SISP) and proceed with an orderly liquidation ("Status Quo Option"), and to seal confidential appendices.

An unnamed unitholder opposed, requesting further consultation, a unitholder vote, and a new solicitation process for liquidation management.

The court denied the unitholder's adjournment request, finding no evidence to support it.

The court granted the Receiver's requests, deferring to the Receiver's business judgment, which was supported by Representative Counsel and a substantial majority of unitholders.

The Monitor sought court advice and directions regarding a proposed extension of an Asset Purchase Agreement (APA) closing date and alleged material breaches of confidentiality obligations by the purchaser, Lagasco Inc., in a Companies' Creditors Arrangement Act (CCAA) proceeding.

The court authorized the Monitor to agree to a final three-week extension of the APA, noting the purchaser's good faith in dealing with unexpected financing issues, but expressed serious concerns about the confidentiality breaches.

The court directed the Monitor to ensure the extension was without prejudice to rights arising from these breaches and to prepare for a potential resumption of the sales process if the APA failed to close.

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 the context of a receivership, representative counsel for the investors of Redstone Capital Corporation brought a motion for leave to deliver a new affidavit in an ongoing substantive consolidation hearing.

The hearing had already commenced and was adjourned pending this motion.

The court applied the test under Rule 39.02(2) of the Rules of Civil Procedure and found that the proposed evidence, which detailed an individual investor's motivation for investing, was not relevant to the test for substantive consolidation.

The motion for leave was dismissed.