Harvey G. Chaiton

On a motion to lift the CCAA stay, the moving parties sought to pursue post-filing software licensing and copyright-related claims against the Canadian debtors in U.S. proceedings, relying in part on a forum selection clause and asserted overlap with claims against U.S. debtors and a purchaser.

The court held that in insolvency proceedings the single proceeding model and the public policy favouring centralized control of claims outweighed the contractual forum provision.

The court found the moving parties were not strangers to the insolvency, that fragmented proceedings created risks of inefficiency and inconsistent findings, and that the U.S. process would not adequately serve the timely and economical resolution of claims within the CCAA.

The motion to lift the stay was dismissed.

Two related companies filed notices of intention to make proposals under the Bankruptcy and Insolvency Act and sought administrative consolidation of their proceedings, approval of an administrative professionals’ charge, and authorization for the proposal trustee to act as foreign representative in Chapter 15 proceedings in the United States.

The court considered the integrated operations of the companies and the shared secured lender and held that administrative consolidation would promote efficient and cost‑effective management of the insolvency proceedings without merging the estates.

The court also approved a $250,000 administrative charge securing professional fees, noting compliance with statutory service requirements and the absence of opposition from the senior secured creditor.

Finally, the proposal trustee was authorized to act as foreign representative and seek recognition of the Canadian proceedings in the United States Bankruptcy Court.

In CCAA proceedings involving several affiliated corporate applicants, the monitor sought court approval of a settlement resolving competing priority claims over estate funds among pension plans, a U.S. bankruptcy trustee, secured lenders, and other creditors.

The settlement provided for partial distributions to pension beneficiaries and retired executives, with the remaining funds payable to the U.S. trustee for the bankruptcy estates of related U.S. debtors.

The court held the settlement was a reasonable and proportionate resolution that avoided costly and protracted litigation over competing statutory deemed trusts and secured claims.

A related motion by the pension plan administrator sought amendment of the salaried pension plan to implement the settlement distribution scheme.

Relying on its broad discretionary authority under s. 11 of the Companies’ Creditors Arrangement Act, the court ordered the amendment where notice had been given and no affected party objected.

A secured lender applied for the appointment of a receiver over two debtor corporations for the limited purpose of completing a sale of substantially all business assets through a pre-packaged transaction.

The debtors did not oppose the application and consented to early enforcement of the lender’s security.

Evidence showed the debt exceeded $2.9 million and that absent a sale the businesses would cease operations and liquidate.

The court found the marketing process fair and comprehensive and that the proposed purchase price exceeded liquidation valuations.

Applying the principles from Royal Bank of Canada v. Soundair, the court approved the receiver’s appointment, authorized the sale agreement, granted a vesting order, and sealed commercially sensitive valuation evidence.

The applicant debtor sought an urgent order appointing an interim receiver under s. 47.1 of the Bankruptcy and Insolvency Act during a Notice of Intention to Make a Proposal proceeding.

The motion requested authority for the interim receiver to borrow up to $1.5 million on a super‑priority basis to fund payroll and contractor obligations in order to maintain business operations.

The court held that the appointment was necessary to protect the debtor’s estate and the interests of creditors.

It further concluded that a super‑priority borrowing charge was appropriate despite the absence of explicit statutory authority for such financing in relation to interim receivers, relying on the court’s inherent jurisdiction.

The charges were granted with priority over construction lien and trust claims to avoid operational shutdown and preserve restructuring prospects.

The appellants appealed from the Court of Appeal's reversal of the CCAA court's decision regarding the priority of pension plan wind-up deficiency claims over court-ordered DIP financing charges.

The majority held that wind-up deficiencies under s. 75(1)(b) of the Pension Benefits Act were subject to a statutory deemed trust under s. 57(4), but that the deemed trust was superseded by the DIP charge by virtue of the doctrine of federal paramountcy.

The majority further held that while the employer-administrator breached its fiduciary duty by failing to ensure the pension plan beneficiaries had adequate notice and representation in the CCAA proceedings, a constructive trust was not an appropriate remedy because the breach did not result in an identifiable asset that it would be unjust for the wrongdoer to retain.

A creditor moved to dismiss a trustee’s fraudulent preference motion under s. 95 of the Bankruptcy and Insolvency Act as statute‑barred.

The trustee argued that the two‑year limitation period under the Limitations Act, 2002 was suspended while an appeal from the bankruptcy order was pending due to the automatic stay under s. 195 of the BIA.

The court held that the BIA stay pending appeal does not suspend or extend the limitation period under the Limitations Act, 2002.

Because the trustee commenced the preference motion more than two years after the bankruptcy order, the claim was statute‑barred.

In obiter, the court further held that if the settlement payments had been voided as preferences, the creditor would have been entitled to file a proof of claim for the full amount of its original judgment rather than the compromised settlement amount.

The court-appointed receiver of a non-profit housing co-operative moved for approval of an agreement of purchase and sale with a non-profit corporation.

The sale would preserve the property as affordable housing but required an increase in occupancy fees to fund necessary repairs.

A competing bidder submitted a revised offer after the bid deadline, matching the financial terms and offering a one-year freeze on occupancy fees, but without a long-term commitment to affordable housing.

Applying the Soundair test and considering the special factors for co-operative housing, the court found the receiver's process was fair and the recommended offer was not improvident.

The motion to approve the sale was granted.

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.