Harvey G. Chaiton

A secured lender applied for the appointment of a receiver over companies engaged in sub‑prime vehicle financing, while the debtor companies brought a cross‑application seeking protection under the Companies’ Creditors Arrangement Act.

The court considered the statutory tests under the Bankruptcy and Insolvency Act and the Courts of Justice Act for appointing a receiver and assessed the parties’ conduct, the deterioration of the secured creditor’s collateral, and the lack of available operating financing.

The debtor companies had made material misrepresentations regarding their financial position and had repeatedly failed to meet repayment deadlines despite forbearance arrangements.

The court found that appointing a receiver was just and convenient to preserve and realize on the secured creditor’s collateral.

The court also refused CCAA relief because the debtors had no restructuring plan or “germ of a plan,” and the major secured creditors opposed any arrangement.

The appellant financed the purchase of two trucks and perfected its purchase money security interests under the PPSA.

The trucks were leased to third parties, insured by the respondent, and subsequently stolen.

The respondent paid the actual cash value of the trucks to the insureds and claimed salvage rights under statutory condition 6(7) of the Insurance Act.

The Court of Appeal held that the appellant's perfected security interests had priority over the respondent's salvage rights.

Section 4(1)(c) of the PPSA and statutory condition 6(7) do not operate to extinguish a prior perfected security interest, and the transfer of title to the insurer was not a sale in the ordinary course of business.

The appellant appealed a motion judge's decision, arguing that there were material facts in dispute and a trial of the issue should have been directed.

The Court of Appeal dismissed the appeal, noting that the appellant had previously taken the position that no material facts were in dispute and could not now seek a trial of an issue.

The court further held that, in any event, there were juristic reasons for the deprivation in the context of the insolvency proceedings.

The appellant, Business Development Bank of Canada, appealed an order equally allocating a receiver's costs between itself and the respondent, Bank of Nova Scotia.

The appellant had originally supported the appointment of a receiver but later opposed it after entering into a side deal to sell its security.

The Court of Appeal dismissed the appeal, finding that the receiver was appointed for the benefit of all interested parties and that the motion judge appropriately exercised his discretion to equally allocate the costs given that the indebtedness of both secured lenders was approximately equal.

The Court of Appeal for Ontario issued a costs endorsement following an appeal in a bankruptcy proceeding.

After receiving submissions from the parties, the court fixed costs in favour of the respondent trustee in bankruptcy at $10,000 and in favour of the respondent creditor at $2,000, both inclusive of disbursements and GST.

The court-appointed interim receiver brought a motion to lift a stay pending appeal of an order approving the sale of the bankrupt companies' assets.

The appellants opposed the sale.

The Court of Appeal found that the appeal had questionable merit and that delaying the sale of the business as a going concern would cause manifest prejudice.

The motion was allowed, the stay was lifted, and the receiver was authorized to complete the sale.

The appellants appealed an order settling a prior order that approved the sale of a bankrupt company's assets, including a trademark licence agreement and shares, to Stanfield's Limited, as well as a vesting order.

The appellants argued the sale should not have been approved prior to determining entitlement to the interest in the licence agreement.

The Court of Appeal dismissed the appeal, finding the motion judge had jurisdiction under Rule 45 of the Rules of Civil Procedure to order the sale prior to determining entitlement, especially given evidence that the value of the licence agreement was deteriorating.

The dismissal of the appellants' cross-motion for an adjournment was also upheld.

The applicant sought a 45-day extension of time to file a proposal under the Bankruptcy and Insolvency Act.

Several creditors opposed, arguing prejudice from erosion of secured receivables and raising concerns about the debtor's good faith, including refusal to consent to a receivership.

The court held that material prejudice under s. 50.4(9) must be measured by the prejudice caused by the extension itself, not by the absence of positive cash flow, and found no creditor materially prejudiced.

The court also found the debtor had acted in good faith and with diligence since filing its notice, and that a viable proposal was likely.

The motion was granted with no costs.